We develop a model of gross capital flows and analyze their role in global financial stability. In our model, consistent with the data, when a country experiences asset fire sales, foreign investments exit (fickleness) while domestic investments abroad return home (retrenchment). When countries...

It is well known fact that all good things, as also bad things, come to an end and business cycles pass through good and bad economic times. Economically 2010 was a year of transition from economic recession to recovery. Economies were improving in some countries and industries were showing...

Accommodative monetary policy during the financial crisis was instrumental in preventing a deeper recession. Views differ, however, on how long such measures should be kept in place. At the heart of this debate is the notion that a protracted period of policy accommodation could create...

In this paper we bring out the performance of the Indian economy, and review the approach of macroeconomic policy especially demand management in the Indian economy. After the shock of the Global Financial Crisis (GFC), India’s economy did not dip much due to the well-directed fiscal stimulus...

This paper reviews recent developments in macro and finance on the relationship between financial risk and the real economy. We focus on three specific topics: the term structure of uncertainty, time variation - and specifically the long-term decline - in the variance risk premium, and time...

The 1920s often called the “Golden 20s” because the equity markets were booming but there were a series of structural issues. Only a few years after the 1st World War the global economy was still suffering from the consequences of the brutal war. The market crash of 1929 came unexpected and...

This lecture revisits the evidence on the incidence and severity of different varieties of financial crises within the context of globalization then (pre-1914) and now (1980 to the present). I then discuss the determinants of emerging market crises from the perspective of the recent balance...

This paper surveys the co-evolution of monetary policy and financial stability for a number of countries across four exchange rate regimes from 1880 to the present. Historical evidence is presented on the incidence, costs and determinants of financial crises along with some empirical evidence on...

This Occasional Paper analyses how significant expansions in central banks' mandates, roles and instruments can result in challenges to the independence of monetary policy. The paper reviews, in particular, some of the key challenges to central bank independence brought about by the global...

The economic history of the United States is riddled with financial crises and banking panics. During the nineteenth-century, eight major such episodes occurred. In the period following World War II, some believed that these crises would no longer happen, and that the U.S. had reached a time of...