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On the Global Impact of Risk-off Shocks and Policy-put Frameworks

Caballero, Ricardo J. - 2019

Global risk-off shocks can be highly destabilizing for financial markets and, absent an adequate policy response, may trigger severe recessions. Policy responses were more complex for developed economies with very low interest rates after the Global Financial Crisis (GFC). We document, however,...

Persistent link: https://www.econbiz.de/10012890990

The Global Impact of Risk-Off Shocks

Caballero, Ricardo J. - 2019

Global risk-off shocks can be highly destabilising for financial markets and, absent an adequate policy response, may trigger severe recessions. In Caballero and Kamber (2019), we document that the unconventional policies adopted by the main central banks were effective in containing asset price...

Persistent link: https://www.econbiz.de/10012870096

Prudential Monetary Policy

Caballero, Ricardo J. - 2020

Should monetary policymakers raise interest rates during a boom to rein in financial excesses? We theoretically investigate this question using an aggregate demand model with asset price booms and financial speculation. In our model, monetary policy affects financial stability through its impact...

Persistent link: https://www.econbiz.de/10012849256

Asset Prices and Aggregate Demand in a "Covid-19" Shock : A model of Endogenous Risk Intolerance and LSAPs

Caballero, Ricardo J. - 2020

In this paper we: (i) provide a model of endogenous risk intolerance and serve aggregate demand contractions following a large (non-financial) shock; and (ii) demonstrate the effectiveness of Large Scale Asset Purchases (LSAPs) in addressing these contractions. The key mechanism stems from...

Persistent link: https://www.econbiz.de/10012836868

Monetary Policy with Opinionated Markets

Caballero, Ricardo J.; Simsek, Alp - 2021

Central banks (the Fed) and markets (the market) often disagree about the path of interest rates. We develop a model where these different views stem from disagreements between the Fed and the market about future aggregate demand. We then study the implications of these disagreements for...

Persistent link: https://www.econbiz.de/10013246804

The 'Other' Imbalance and the Financial Crisis

Caballero, Ricardo J. - 2009

the U.S. would experience a sudden stop of capital flows, which would unavoidably drag the world economy into a deep … instead that the root imbalance was of a different kind: The entire world had an insatiable demand for safe debt instruments … of exposing the economy to a systemic panic. This structural problem can be alleviated if governments around the world …

Persistent link: https://www.econbiz.de/10013152926

A risk-centric model of demand recessions and speculation

Caballero, Ricardo J.; Simsek, Alp - 2019

Persistent link: https://www.econbiz.de/10012177384

A Risk-Centric Model of Demand Recessions and Macroprudential Policy

Caballero, Ricardo J. - 2019

We theoretically analyze the interactions between asset prices, nancial speculation, and macroeconomic outcomes when output is determined by aggregate demand. If the interest rate is constrained, a rise in the risk premium lowers asset prices and generates a demand recession. This reduces...

Persistent link: https://www.econbiz.de/10012898808

A risk-centric model of demand recessions and macroprudential policy

Caballero, Ricardo J.; Simsek, Alp - 2017 - This draft: July 14, 2017

We provide a continuous-time "risk-centric" representation of the New Keynesian model, which we use to analyze the interactions between asset prices, financial speculation, and macroeconomic outcomes when output is determined by aggregate demand. In principle, interest rate policy is highly...

Persistent link: https://www.econbiz.de/10011689630

Global safe asset shortage : the role of central banks

Caballero, Ricardo J. - In: Progress and confusion : the state of macroeconomic policy, (pp. 261-266). 2016

Persistent link: https://www.econbiz.de/10011555789