T his paper examined whether monetary policy is acyclical, procyclical or countercyclical and the implications of the interaction of such cyclicality with industrial output on real economic growth in Nigeria. After determining the time series properties of the variables and based on conventional cyclicality measures, the fully modified ordinary least square method was used to examine...

Standard banking theory suggests that there exists an optimal level of credit risk that yields maximum bank profit. We identify the optimal level of risk-weighted assets that maximizes banks’ returns in the full sample of US banks over the period 1996–2011. We find that this optimal level is cyclical for the average bank, being higher than the realized credit risk in relatively stable periods w...

Recent work on optimal policy in sticky price models suggests that demand management through fiscal policy adds little to optimal monetary policy. We explore this consensus assignment in an economy subject to ‘deep’ habits at the level of individual goods where the counter-cyclicality of mark-ups this implies can result in government spending crowding-in private consumption in the short run. We...

In contrast to industrialized countries, emerging market economies are characterized by proor acyclical monetary policies and high output volatility. This paper argues that those facts can be related to a long-run feature of the economy – namely, its institutional quality (IQL). The paper presents evidence that supports the link between an index of IQL (law and order, government stability, inve...

Motivated by recent findings on the cyclical movement of both health and health spending, we construct a general equilibrium model that distinguishes health care demand from the demand for other goods. Using this model, we are able to generate inflation dynamics and cyclicality of health that match the US data. When the model is subjected to an expansionary monetary policy shock, it yields diff...

In this paper, we investigate the relationship between balance sheet size and leverage (i.e., pro-cyclicality) pro-cyclicality of systemic risk using three measures such as ΔCoVaR (Adrian Brunnermeier (2016)), MES (Acharya et al. (2017)), SRISK (Brownlees Engle (2016)). We conduct an extensive panel data analysis a sample 264 Chinese listed financial institutions (43 commercial banks, 74 financ...