This paper examines potential interactions between financial stability and the monetary policy strategies and tools considered in the Federal Reserve’s review of monetary policy strategy, tools, and communication practices. Achieving the Federal Reserve’s goals of full employment and price...

We study whether a central bank should deviate from its objective of price stability to promote financial stability. We tackle this question within a textbook New Keynesian model augmented with capital accumulation and microfounded endogenous financial crises. We compare several interest rate...

1. History and purpose of central banking -- 2. Post-World War II macroeconomic policy -- 3. Contemporary Federal Reserve policy -- 4. Globalization, deregulation, mounting global capital flows -- 5. New activism by the European Central Bank (ECB) and the Bank of Japan -- 6. Financial crises --...