Seminar series The self-defeating demand for safety Macroeconomics seminar Add to calendar 2021-05-21 15:30 2021-05-21 16:45 Europe/Rome The self-defeating demand for safety via zoom YYYY-MM-DD Print Share: Share on Facebook Share on BlueSky Share on X Share on LinkedIn Send by email Scheduled dates May 21 2021 15:30 - 16:45 CEST via zoom Organised by Department of Economics In this seminar Sanjay Raj Singh, University of California Davis, presents the paper "The self-defeating demand for safety" joint with Keshav Dogra (New York Fed) and Sushant Acharya (Bank of Canada). We present a stylized model of financial market volatility, in which the demand for safety is self-defeating. Fearing that asset prices may fall, risk-averse investors demand safe assets from risk-neutral financial intermediaries. Issuance of safe assets by leveraged intermediaries, in turn, exposes the economy to self-fulfilling asset price crashes. Financial innovation triggers demand for safety and market fragility.