Ricardo Caballero, 22 February 2009

Banks must be fixed as their troubles are at the heart of the economic recession. In this column, one of the world’s most distinguished macroeconomists suggests a radical alternative to current policies. Governments should promise to buy twice the number of outstanding bank shares in 5 years at twice their recent prices. Markets would immediately price-in this pledge, and the resulting price boom would allow banks to raise necessary capital from private sources.

Events

CEPR Policy Research