Cociuba, Simona E.; Shukayev, Malik; Ueberfeldt, Alexander - University of Western Ontario, Economic Policy Research … - 2012
A view advanced in the aftermath of the late-2000s fi?nancial crisis is that lower than optimal interest rates lead to excessive risk taking by fi?nancial intermediaries. We evaluate this view in a quantitative dynamic model where interest rate policy affects risk taking through two channels....