Bank of Toronto

 [This is the last half of a two-part critique of Douglas Diamond and Philip Dybvig's highly influential paper purporting to show that fractional reserve banking systems are inherently unstable. Part I can be found here.] Sauce for the Goose… Half a century after the fact, the "aggregate…

Today, when we speak of ways to fight recessions, two options inevitably take pride of place: expansionary Fed policy (meaning lower interest rates or more asset purchases or both) and expansionary fiscal policy (more government spending or lower taxes or both). But if you've been keeping up…