We augment a standard New Keynesian model with a financial accelerator mechanism and show that financial frictions generate large state-dependent amplification effects. We fit the model to US data and show that, when shocks drive the model far away from the steady state, the nonlinear model...

On 3 December EY hosted a SUERF conference on banking reform with Sir Howard Davies, the Chairman of RBS, and Dame Colette Bowe, the Chairman of the Banking Standards Board, as the two keynote speakers. Professor David Miles (Imperial College) gave the SUERF 2015 Annual Lecture on Capital and...

Central bankers express concerns that central bank digital currencies (CBDCs) might disintermediate commercial banks and facilitate bank runs. We analyze these concerns in a DSGE framework and provide a rationale for the disintermediation of the banking sector. Our focus is on the central bank's...

This article aims to highlight the nonlinearity of the reaction function of the Central Bank of West African States (BCEAO) through financial stability. Using the smooth threshold autoregressive (STAR) model on aggregate data for the period 1970-2020, the study reveals that the dynamics of the...