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 -