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This paper identifies two types of market failures. The first concerns a coordination problem associated with panics. The problem in analysing this type of market failure from a policy perspective is that there is no widely accepted method for selecting equilibria. The second market failure...
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works on the theory of banking crises. It also covers specialized topics, with sections on currency crises and financial …, 110 (460), January, 236-55 -- Douglas W. Diamond and Raghuram G. Rajan (2006), 'Money in a Theory of Banking', American …
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