The optimization model built by F. Bruni and F. Paterno underlines, in the definition of the objective function and the constraints, some costs and benefits associated with the policy choice of bailout versus no-bailout. It would be of interest to introduce some other real costs, i.e., costs for the real economy. For example, the bailout policy could lead to systemic distortions (the “moral hazard” arguments) and to crowding-out effects generated by increased public expenditures. Conversely, the no-bailout policy could induce a cumulative loss of confidence, systemic repercussions, and short-run and long-run implications on investment, growth, employment, etc. In both cases, the policy has an impact on the real growth path. The channels and the intensity of this impact need to be analyzed more carefully by referring to dynamic models with a sufficient degree of integration of real and financial variables.
KeywordsMonetary Policy Financial Institution Hedge Fund European Central Bank Capital Ratio
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