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We assess the effects of financial shocks on inflation, and to what extent financial shocks can account for the … shocks through sign restrictions. Our main finding is that expansionary financial shocks temporarily lower inflation. This … during the latest financial crisis. We then explore the transmission channels of financial shocks relevant for inflation, and …
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The role of bank capital as a propagation channel of shocks is strongly pronounced in recent macroeconomic models. In this paper, we show how the evolution of bank capital depends on the share of non-state-contingent assets in banks’ balance sheets and present the consequences for...
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The financial crisis has deeply affected money markets and thus, potentially, the proper functioning of the interest rate channel of monetary policy transmission. Therefore, we analyze the effectiveness of monetary policy in steering euro area money market rates looking at, first, the...
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