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02141cas a2200289 a 4500 |
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|c 5.00 USD
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|z 9781498303804
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|a 1018-5941
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|a BD-DhAAL
|c BD-DhAAL
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|a Ebrahimy, Ehsan.
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|a Fire Sales in Frozen Markets /
|c Ehsan Ebrahimy.
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|a Washington, D.C. :
|b International Monetary Fund,
|c 2019.
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|a 1 online resource (39 pages)
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|a IMF Working Papers
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|a <strong>Off-Campus Access:</strong> No User ID or Password Required
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|a <strong>On-Campus Access:</strong> No User ID or Password Required
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|a Electronic access restricted to authorized BRAC University faculty, staff and students
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|a It is challenging to explain the collapse in the price of subprime mortgage-backed securities (MBS) during the Financial Crisis of 2008, using the existing models of fire-sale. I present a model to demonstrate that fire-sales may happen even when there is a relatively sizable pool of natural buyers and in the absence of asymmetric information, due to a coordination failure among buyers: buyers' waiting to trade at a lower price tomorrow, can lead to a collapse in the price and trade volume today. In particular, I show that when trade is decentralized and participation is endogenous, a medium level of asset demand and liquidity needs that are ex-pected to increase over time create complementarity among buyers' decisions to wait. This complementarity makes competitive markets prone to coordination failures and fire-sales accompanied by a collapse in the trade volume. Fire-sales may also be inefficient. I also discuss various policy options to eliminate the risk of fire-sales in such a setup.
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|a Mode of access: Internet
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|a Asset Market
|2 imf
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|a Asset Price
|2 imf
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|a Equilibrium Price
|2 imf
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|a WP
|2 imf
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|a IMF Working Papers; Working Paper ;
|v No. 2019/092
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| 856 |
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|z Full text available on IMF
|u http://elibrary.imf.org/view/journals/001/2019/092/001.2019.issue-092-en.xml
|z IMF e-Library
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