Maximilian Guennewig

Welcome to my website!

I am a postdoctoral research fellow at the Institute for Finance and Statistics, housed within the University of Bonn’s Department of Economics. I obtained my PhD from the LSE.

My research focuses on Monetary Economics and Finance, in particular on digital currencies and bank recapitsalisation strategies.

You can contact me via guennewi at gmail dot com.

Click here to download my CV.

Working papers


submitted for publication

This paper analyses the consequences for monetary policy in the presence of currencies issued by firms. Such currencies generate seignorage revenues and information on consumers. In a benchmark model of imperfectly competing firms, information breaks the usual portfolio indeterminacy as in Kareken and Wallace (1981): firms do not accept their competitors' currencies. This limits the issuer's seignorage base. Firms then optimally implement the Friedman rule to remove their seignorage income altogether. As a result, public currency is unable to compete unless the central bank follows suit, resulting in deflation. However, private currency market power - modelled as concentration of decision powers in a currency consortium as well as network effects - induces inflationary pressures, breaking the benchmark results.


to be updated with Covid crisis data in late 2022

We empirically investigate the credibility of bank recapitalization reforms using a structural model similar to Merton (1974, 1977). Bank liabilities are contingent claims on its assets so that bank equity and debt can be interpreted as options on asset values. In the data, credit spreads on bank debt are valued as the product of ‘no-bailout’ probabilities and expected loss rates in the absence of a bailout. We calculate the latter using equity and balance sheet data. The no-bailout probability is estimated by regressing credit default swaps (CDS) spreads on the model-implied no-bailout loss rates. Before the Lehman bankruptcy, we find significantly higher market-perceived bailout probabilities for US banks, particularly G-SIBs, relative to non-financial firms. Since the Great Financial Crisis, bailout probabilities have clearly declined, and no longer differ statistically significantly.



substantially revised draft coming soon

In a model with asymmetric information on asset returns, banks issue demandable debt if the government's preferred resolution strategy takes the form of bail-ins. Creditors then respond to news on bank fundamentals and subsequent runs on loss-absorbing debt render bail-ins ineffective. Controlling the maturity structure of debt has two benefits. First, longer maturity debt disciplines markets ex-post while avoiding government bailouts. Second, ex-ante market discipline, measured by the average quality of projects, increases. The model provides an explanation why regulators impose minimum maturity requirements for bail-in debt and a motivation to treat short-term debt preferentially during intervention.

Work in progress


Bailouts, Bail-ins and Bagehot: New Principles for the Lender of Last Resort

Teaching


Lecturer, University of Bonn, Digital Finance (MSc)

I designed a course on blockchain economics and digital currency competition. Students learn about the economic limits of blockchains and develop an understanding of currency competition in models of money as medium of exchange.

Syllabus 2021/22


Teaching Fellow, LSE, Ec424 Monetary Economics and Aggregate Fluctuations (MSc)

Teaching Evaluations (2017 - 2021)


Teaching Assistant, LSE, Ec210 Intermediate Macroeconomics (BSc)

Teaching Evaluations 16/17