Equivalence between the Diamond-Dybvig banking model and the optimal income taxation model

Ping LIN

doi:10.1016/S0165-1765(02)00304-X

Equivalence between the Diamond-Dybvig banking model and the optimal income taxation model

Ping LIN

Department of Economics

Research output: Journal Publications › Journal Article (refereed) › peer-review

1 Citation (Scopus)

Abstract

It is shown that the Diamond-Dybvig [Journal of Political Economy 96 (1983) 768] banking model with a continuum of types of agents has the same analytical structure as the standard optimal income taxation model [Review of Economic Studies 38 (1971) 175; Review of Economic Studies 43 (1976) 261]. Insights from the income taxation literature immediately imply that a bank-run equilibrium exists in the banking model as long as the long-term project is sufficiently costly to liquidate.

Original language	English
Pages (from-to)	193-198
Number of pages	6
Journal	Economics Letters
Volume	79
Issue number	2
DOIs	https://doi.org/10.1016/S0165-1765(02)00304-X
Publication status	Published - 1 May 2003

Funding

sThis paper is based on Section 2.7 of my doctoral dissertation submitted to the Graduate School of the University of Minnesota. I am indebted to my supervisors Ed Green and Neil Wallace for their guidance and advice. I also thank Nobuhiro Kiyotaki, Antonio Merlo and Arijit Mukherji for their useful comments and suggestions.

Keywords

Bank run
Demand deposit contract
Optimal income taxation

Access to Document

10.1016/S0165-1765(02)00304-X

Cite this

@article{48d787a8b28f470e87d826be29ed9348,

title = "Equivalence between the Diamond-Dybvig banking model and the optimal income taxation model",

abstract = "It is shown that the Diamond-Dybvig [Journal of Political Economy 96 (1983) 768] banking model with a continuum of types of agents has the same analytical structure as the standard optimal income taxation model [Review of Economic Studies 38 (1971) 175; Review of Economic Studies 43 (1976) 261]. Insights from the income taxation literature immediately imply that a bank-run equilibrium exists in the banking model as long as the long-term project is sufficiently costly to liquidate.",

keywords = "Bank run, Demand deposit contract, Optimal income taxation",

author = "Ping LIN",

year = "2003",

month = may,

day = "1",

doi = "10.1016/S0165-1765(02)00304-X",

language = "English",

volume = "79",

pages = "193--198",

journal = "Economics Letters",

issn = "0165-1765",

publisher = "Elsevier B.V.",

number = "2",

}

TY - JOUR

T1 - Equivalence between the Diamond-Dybvig banking model and the optimal income taxation model

AU - LIN, Ping

PY - 2003/5/1

Y1 - 2003/5/1

N2 - It is shown that the Diamond-Dybvig [Journal of Political Economy 96 (1983) 768] banking model with a continuum of types of agents has the same analytical structure as the standard optimal income taxation model [Review of Economic Studies 38 (1971) 175; Review of Economic Studies 43 (1976) 261]. Insights from the income taxation literature immediately imply that a bank-run equilibrium exists in the banking model as long as the long-term project is sufficiently costly to liquidate.

AB - It is shown that the Diamond-Dybvig [Journal of Political Economy 96 (1983) 768] banking model with a continuum of types of agents has the same analytical structure as the standard optimal income taxation model [Review of Economic Studies 38 (1971) 175; Review of Economic Studies 43 (1976) 261]. Insights from the income taxation literature immediately imply that a bank-run equilibrium exists in the banking model as long as the long-term project is sufficiently costly to liquidate.

KW - Bank run

KW - Demand deposit contract

KW - Optimal income taxation

UR - http://commons.ln.edu.hk/sw_master/2543

UR - http://www.scopus.com/inward/record.url?scp=0037401684&partnerID=8YFLogxK

U2 - 10.1016/S0165-1765(02)00304-X

DO - 10.1016/S0165-1765(02)00304-X

M3 - Journal Article (refereed)

SN - 0165-1765

VL - 79

SP - 193

EP - 198

JO - Economics Letters

JF - Economics Letters

IS - 2

ER -

Equivalence between the Diamond-Dybvig banking model and the optimal income taxation model

Abstract

Funding

Keywords

Access to Document

Other files and links

Cite this