This paper develops a network model of interbank lending in which unsecured claims, repo activity and shocks to the haircuts applied to collateral assume centre stage. We show how systemic liquidity crises of the kind associated with the interbank market collapse of 2007–2008 can arise within...

The monetary transmission mechanism describes the channels through which changes in monetary policy affect the policy target, price inflation. Understanding the transmission mechanism is thus central to the successful conduct of monetary policy. This paper uses a Vector AutoRegressive (VAR)...

The paper presents a theoretical model of how banks and the non-bank private sector respond to changes in monetary policy. Unlike many textbook models in which banks play no active role, the banking sector is recognised here as playing a key part in transmitting changes in monetary policy to the...

This paper discusses some of the operational issues relevant to the implementation of an inflation-targeting regime. In particular it focuses on: whether inflation targeting is 'new'; whether (and how) the forward-looking nature of inflation-targeting helps to prevent instabilities in inflation;...

This paper documents some stylized facts on evolving UK Phillips curves, and shows how these differ from their US versions. We interpret UK Phillips curve dynamics in a positive theory of monetary policy û how policy-maker attitudes on the Phillips curve have evolved since the 1950s û rather...

A new CEP report says that the financial system has become far more complicated than it need to be - and dangerously unstable too

In July 1999, the CEP held a second meeting of policymakers and thinkers to examine in greater detail aspects of the international financial architecture and proposals for its reform. This Special Report includes revised versions of the main papers presented, including those from Peter Kenen,...

This paper documents some stylized facts on evolving UK Phillips curves, and shows how these differ from their US versions. We interpret UK Phillips curve dynamics in a positive theory of monetary policy - how policy-maker attitudes on the Phillips curve have evolved since the 1950s - rather...