Amplification Mechanisms in Liquidity Crises
描述了危机中两种放大机制：一是资产价格与资产负债表相互作用导致冲击放大；二是投资者因不确定性而退出市场加剧危机。讨论了央行流动性供给和事前监管政策的好处。
I describe two amplifications mechanisms that operate during crises and discuss the benefits of policy given each mechanism. The first mechanism involves asset prices and balance sheets. A negative shock to agents' balance sheets causes them to liquidate assets, lowering prices, further deteriorating balance sheets and amplifying the shock. The second mechanism involves investors' Knightian uncertainty. Unusual shocks to untested financial innovations increase agents' uncertainty about their investments, causing them to disengage from markets and amplifying the crisis. Liquidity provision by the central bank alleviates the crisis in both mechanisms. Ex ante policies such as liquidity/capital requirements may also be beneficial.