Challenge of Financial Stability

Charles A.E. Goodhart, Emeritus Professor of Banking and Finance, and long-standing member of the Financial Markets Group, at the London School of Economics, UK and Dimitrios P. Tsomocos, Professor University Reader in Financial Economics and Fellow in Management, Saïd Business School and St. Edmund Hall, University of Oxford, UK

• Contents:1. Introduction Charles A.E. Goodhart and Dimitrios P. TsomocosPART I: OVERVIEW 2. ‘Analysis of Financial Stability’, Charles A.E. Goodhart and Dimitrios P. Tsomocos in Pierre L. Siklos, Martin T. Bohl and Mark E. Bohar (eds), Challenges in Central Banking: The Current Institutional Environment and Forces Affecting Monetary Policy, Cambridge, UK: Cambridge University Press, 2010, pp.121–453. ‘Evaluation of Macroeconomic Models for Financial Stability Analysis’, Gunnar Bårdsen, Kjersti-Gro Lindquist and Dimitrios P. Tsomocos, Journal of World Economic Review, 3 (1), January–June 2008, 7–32PART II: THEORY 4. ‘Equilibrium Analysis, Banking and Financial Instability’, Dimitrios P. Tsomocos, Journal of Mathematical Economics, 39, 2003, 619–555. ‘A Model to Analyse Financial Fragility’, with Pojanart Sunirand, Economic Theory, 27, 2006, 107–426. ‘On Modelling Endogenous Default’, Dimitrios P. Tsomocos and Lea Zicchino, OFRC-fe, 2005, 1–19 7. ‘Banks, Relative Performance, and Sequential Contagion’, with Sudipto Bhattacharya and Pojanart Sunirand, Economic Theory, 32, 2007, 381–98PART III: APPLICATIONS 8. ‘A Model to Analysis Financial Fragility: Applications’, with Pojanart Sunirand, Journal of Financial Stability, 1, 2004, 1–309. ‘A Risk Assessment Model For Banks’, with Pojanart Sunirand, Annals of Finance, 2, 2006, 1–2110. ‘A Time Series Analysis of Financial Fragility in the UK Banking System’, with Pojanart Sunirand, Annals of Finance, 2, 2006, 1–2111. ‘An Equilibrium Approach to Financial Stability Analysis: The Colombian Case’, Agustín Saade, Daniel Osorio and Dairo Estrada, Annals of Finance, 3, 2007, 75–105 12. ‘A Model of Financial Fragility’, Kevin James, CCBS, 2006, 1–8PART IV: LIQUIDITY AND COLLATERAL 13. ‘Modeling a Housing and Mortgage Crisis’, with Alexandros P. Vardoulakis, Financial Stability, Monetary Policy, and Central Banking, 2010, 215–53 14. State Prices, Liquidity, and Default’, with Raphaël A. Espinoza, Economic Theory, 39, 2009, 177–94 PART V: CONCLUSION 15. Conclusion Charles A.E. Goodhart and Dimitrios P. Tsomocos

‘Without doubt, the Goodhart and Tsomocos framework of endogenous default with credit chain is part of a new paradigm for explaining the current financial crisis which is worth betting on it.’