In distilling a vast literature spanning the rational— irrational divide, this paper offers reflections on why asset bubbles continue to threaten economic stability despite financial markets becoming more informationally-efficient, more complete, and more heavily influenced by...

I estimate the comparative causal effects of monetary policy "leaning against the wind" (LAW) and macroprudential policy on bank-level lending and leverage by drawing on a single natural experiment. In 1920, when U.S. monetary policy was still decentralized, four Federal Reserve Banks...

In this paper we study the relationship between price stability and financial stability. We try to determine whether asset prices are useful indicators for determining future inflation rates and we analyze the tensions in the interbank market during the last five years by means of a GARCH (1,1)...

Central banks have become poles of stability and decisive factors of globalization. Financial stability represents a national issue, a public asset, that requires both an intervention of public judicious authorities and their cooperation with private sector. Given the integration of financial...

There is a significant literature related to the causes of the recent financial crisis, but the costs and measures that it involved are still under discussion. The recent turmoil has proved to be more costly in terms of GDP growth and public debt. The smaller fiscal costs were due, in part, to...

In this paper we empirically study interactions between real activity and the financial stance. Using aggregate data we examine a number of candidate measures of the financial stance of the economy. We find strong evidence for substantial spillover effects on aggregate activity from our...

During the two decades preceding the 2007-8 financial crisis, both advanced and emerging market economies experienced larger credit growth and asset price fluctuations than in the more distant past. These phenomena were largely due to the establishment of credible inflation targeting regimes,...