Some economists argue that models of adverse selection in loan markets can display market failures that rationalize a welfare-enhancing role for government intervention. Such models impose restrictive assumptions on the way agents interact. The same adverse selection models with a less restrictive definition of equilibrium display endogenous financial intermediaries and predict no welfare-enhancing role for the government.
Our Research Focus: Financial Markets and Institutions
To receive a notification by email when Economic Quarterly is posted online or to order single copies of past issues, click on the links below (published online only since 2012).