Capital Flows and the Risk-Taking Channel of Monetary Policy
نویسندگان
چکیده
We study the dynamics linking monetary policy with bank leverage and show that adjustments in leverage act as the linchpin in the monetary transmission mechanism that works through uctuations in risk-taking. Motivated by the evidence, we formulate a model of the “risk-taking channel” of monetary policy in the international context that rests on the feedback loop between increased leverage of global banks and capital ows amid currency appreciation for capital recipient economies. JEL Codes: F32, F33, F34
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