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Economic Quarterly

First Quarter 2016

Models of Discount Window Lending: A Review

Huberto M. Ennis

This article is a review of the literature that discusses the role of the central-bank discount window using explicit formal general equilibrium models of the economy. For each of the main papers in the literature, a description of the model and the main mechanisms at play is provided. To increase accessibility for a broad audience, the discussion attempts to keep at a minimum the more technical aspects of the subject. A deliberate effort is made to identify common features across models and some lessons that may be useful for policymaking.


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