Does Easing Monetary Policy Increase Financial Instability is popular PDF and ePub book, written by Ambrogio Cesa-Bianchi in 2015-06-26, it is a fantastic choice for those who relish reading online the Business & Economics genre. Let's immerse ourselves in this engaging Business & Economics book by exploring the summary and details provided below. Remember, Does Easing Monetary Policy Increase Financial Instability can be Read Online from any device for your convenience.
Does Easing Monetary Policy Increase Financial Instability Book PDF Summary
This paper develops a model featuring both a macroeconomic and a financial friction that speaks to the interaction between monetary and macro-prudential policies. There are two main results. First, real interest rate rigidities in a monopolistic banking system have an asymmetric impact on financial stability: they increase the probability of a financial crisis (relative to the case of flexible interest rate) in response to contractionary shocks to the economy, while they act as automatic macro-prudential stabilizers in response to expansionary shocks. Second, when the interest rate is the only available policy instrument, a monetary authority subject to the same constraints as private agents cannot always achieve a (constrained) efficient allocation and faces a trade-off between macroeconomic and financial stability in response to contractionary shocks. An implication of our analysis is that the weak link in the U.S. policy framework in the run up to the Global Recession was not excessively lax monetary policy after 2002, but rather the absence of an effective regulatory framework aimed at preserving financial stability.
Detail Book of Does Easing Monetary Policy Increase Financial Instability PDF
- Author : Ambrogio Cesa-Bianchi
- Release : 26 June 2015
- Publisher : International Monetary Fund
- ISBN : 9781513547909
- Genre : Business & Economics
- Total Page : 47 pages
- Language : English
- PDF File Size : 14,8 Mb
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