This article reports estimates of the long-run costs and benefits of having banks fund more of their assets with loss-absorbing capital, or equity. We model how shifts in funding affect required rates of return and how costs are influenced by the tax system. We draw a clear distinction between costs to individual institutions (private costs) and overall economic (or social) costs. We find that the amount of equity capital that is likely to be desirable for banks to use is very much larger than banks have used in recent years and also higher than targets agreed under the Basel III framework. for helpful comments. Jochen Schanz helped greatly to clarify our thinking about the link between our estimates of optimal capital ratios and Basel III rules. We also thank him for Appendix B.

This article assesses the impact of Quantitative Easing and other unconventional monetary policies followed by central banks in the wake of the financial crisis that began in 2007. We consider the implications of theoretical models for the effectiveness of asset purchases and look at the evidence from a range of empirical studies. We also provide an overview of the contributions of the other articles in this Feature.

Over the next few decades there will be signi®cant changes in the demographic structure of nearly all developed countries. Such dramatic demographic change could have a powerful impact upon saving behaviour, but estimates of how great the effects will be differ depending on what evidence is used. This paper argues that simulations based on calibrated general equilibrium models are likely to provide the most reliable evidence. A model is developed and is used to assess the impact of reforms to pension systems.