Monetary Stability, Financial Stability and the Business Cycle: Five Views

Monetary aggregates, financial intermediate and the business cycle

Monetary Aggregates and the Central Bank’s Financial Stability Mandate

Money is the balance sheet counterpart to bank lending. As such, highly procyclical components of money reflect incremental bank lending that may reverse abruptly as financial conditions deteriorate. Components of monetary aggregates that correspond to cross-border banking sector flows depend sensitively on both domestic and global financial factors and display a procyclical pattern that may be...

Implications of the Design of Monetary Policy for Financial Stability

This paper is a contribution to the literature on the factors behind financial stability, focusing on monetary policy design. In particular, it assesses empirically for a sample of 79 countries in the period 1970 to 2000 whether the choice of the central bank objectives and the monetary policy strategy affect financial stability. We find that focusing the central bank objectives on price stabil...

COMMENTARY Monetary Policy and Financial Stability: An Emerging Markets Perspective

The world has endured a deep financial crisis and a great recession. Emerging markets are performing much better than they have in the past, especially in Latin America. The huge difference between the recent crisis and previous ones in emerging economies is that this time ‘it was not our fault’. The evidence from the emerging countries facing this unprecedented global downturn indicates that p...

Eductive Stability in Real Business Cycle Models

Within the standard RBC model, we examine issues of expectational coordination on the unique rational expectations equilibrium. Our study …rst provides a comprehensive assessment of the sensitivity of agents’plans and decisions to their short-run and long-run expectations. We show this sensitivity is much too great to trigger eductive coordination in a world of hyper-rational agents, who are en...