Whither Monetary and Financial Stability? The Implications of Evolving Policy Regimes

White, William R.; Borio, Claudio

doi:10.2139/ssrn.901387

Cited by 281 publications

(210 citation statements)

References 91 publications

Supporting

Mentioning

195

Contrasting

Unclassified

Order By: Relevance

“…In addition to income concentration we use several macroeconomic aggregates attributed as factors behind credit growth as control variables. These include real GDP per capita, investments as a share of GDP, short-term interest rates, and broad money (M2) as a share of GDP (Bordo and Meissner 2012;Borio and White 2003;Mendoza and Terrone 2008). The data on investment as a share of GDP, short-term interest rates, and broad money (M2) as a share of GDP is obtained from the dataset of Schularik and Taylor (2012).…”

Section: Data and Unit Root Testsmentioning

confidence: 99%

Does income inequality contribute to credit cycles?

Malinen

2016

J Econ Inequal

View full text Add to dashboard Cite

Recent literature has presented arguments linking income inequality on the financial crash of 2007 -2009. One proposed channel is expected to work through bank credit. We analyze the relationship between income inequality and bank credit in panel cointegration framework, and find that they have a long-run dependency relationship. Results show that income inequality has contributed to the increase of bank credit in developed economies after the Second World War. JEL classification: C23, D31, G21

show abstract

Section: Data and Unit Root Testsmentioning

confidence: 99%

Does income inequality contribute to credit cycles?

Malinen

2016

J Econ Inequal

View full text Add to dashboard Cite

show abstract

“…If financial imbalances occur nevertheless, the central bank is asked to clean up afterwards. The second and opposing view, the alternative or proactive view, is represented for example by Borio and White (2004), Roubini (2006), andWoodford (2012). Authors favoring this view question that all relevant information is already included in the forecasts of inflation and output.…”

Section: Monetary Policy Financial Stability and The Taylor Rulementioning

confidence: 99%

The Taylor Rule and Financial Stability – A Literature Review with Application for the Eurozone

Käfer

2014

Review of Economics

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThe question of whether central banks should bear responsibility for financial stability is still unanswered. Regarding interest rate implementation, it is thus not clear if and how the Taylor rule should be augmented by an additional financial stability term. This paper reviews the normative and positive literature on Taylor rules augmented with exchange rates, asset prices, credit, and spreads. These measures have developed as common indicators of financial (in)stability in the Taylor rule literature. In addition, our own analysis describes the development of these indicators for the core and the periphery of the Eurozone. Given the large degree of heterogeneity between euro area countries, the conclusion here is that an interest rate reaction to instability by the European Central Bank would be inappropriate in times of crisis. However, this conclusion is somewhat weakened if there is no crisis. JEL Classification:E52, F33, F42

show abstract

“…Under such circumstances, accepting a somewhat lower inflation rate in the short run should be seen as worthwhile to balance the risks regarding price stability over time. This could be interpreted as an example of the "leaning against the wind" strategy (Borio and White, 2003). The appeal of this approach, however, depends sensitively on the ability of central banks to detect the incipient imbalances and the effectiveness of monetary policy to counteract them.…”

Section: Fiscal Sustainability: the Threat Of Fiscal Dominancementioning

confidence: 99%

Is Monetary Policy Overburdened?

Orphanides

2013

SSRN Journal

View full text Add to dashboard Cite

Following the experience of the global financial crisis, central banks have been asked to undertake unprecedented responsibilities. Governments and the public appear to have high expectations that monetary policy can provide solutions to problems that do not necessarily fit in the realm of traditional monetary policy. This paper examines three broad public policy goals that may overburden monetary policy: full employment; fiscal sustainability; and financial stability. While central banks have a crucial position in public policy, the appropriate policy mix also involves other institutions, and overreliance on monetary policy to achieve these goals is bound to disappoint. Central Bank policies that facilitate postponement of needed policy actions by governments may also have longer-term adverse consequences that could outweigh more immediate benefits. Overburdening monetary policy may eventually diminish and compromise the independence and credibility of the central bank, thereby reducing its effectiveness to preserve price stability and contribute to crisis management.

show abstract

Whither Monetary and Financial Stability? The Implications of Evolving Policy Regimes

Cited by 281 publications

References 91 publications

Does income inequality contribute to credit cycles?

Does income inequality contribute to credit cycles?

The Taylor Rule and Financial Stability – A Literature Review with Application for the Eurozone

Is Monetary Policy Overburdened?

Contact Info

Product

Resources

About