Trading for bailouts / by Toni Ahnert, Caio Machado and Ana Elisa Pereira.: FB3-5/2020-23E-PDF
"Government interventions such as bailouts are often implemented in times of high uncertainty. Policymakers may therefore rely on information from financial markets to guide their decisions. We propose a model in which a policymaker learns from market activity and where market participants have high stakes in the intervention. We study how the strategic behavior of informed traders affects market informativeness, the probability and efficiency of bailouts, and stock prices. We apply the model to study the liquidity support of distressed banks and derive implications for market informativeness and policy design. Commitment to a minimum liquidity support can increase market informativeness and welfare"--Abstract.
Permanent link to this Catalogue record:
publications.gc.ca/pub?id=9.888234&sl=0
| Department/Agency | Bank of Canada, issuing body. |
|---|---|
| Title | Trading for bailouts / by Toni Ahnert, Caio Machado and Ana Elisa Pereira. |
| Series title | Staff working paper = Document de travail du personnel, 1701-9397 ; 2020-23 |
| Publication type | Series - View Master Record |
| Language | [English] |
| Format | Electronic |
| Electronic document | |
| Note(s) | "Last updated: June 4, 2020." Includes bibliographical references (pages 30-31). |
| Publishing information | Ottawa, Ontario, Canada : Bank of Canada = Banque du Canada, 2020. ©2020 |
| Author / Contributor | Ahnert, Toni, author. |
| Description | 1 online resource (51 pages) : colour illustrations. |
| Catalogue number |
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| Subject terms | Intervention (Federal government) -- Econometric models. Bailouts (Government policy) Econometric models -- Econometric models. Stocks -- Prices -- Econometric models. Intervention (Gouvernement fédéral) -- Modèles économétriques. Renflouement (Finances) -- Modèles économétriques. Actions (Titres de société) -- Prix -- Modèles économétriques. |