Prolonged financial distress, which has now lasted for almost a year, is debilitating the financial system and risking a full-fledged crisis. Central bank interventions have thus far prevented worst-case outcomes, but they have alleviated symptoms rather than the underlying causes.
Avoiding disorderly deleveraging
Luigi Spaventa, 8 May 2008
The Need for an Emergency Bank Debt Insurance Mechanism
Javier Suarez, 27 March 2008
Bagehot, central banking, and the financial crisis
Xavier Vives, 31 March 2008
The present financial crisis poses two main questions: whether it is similar to past crises and how central banks should intervene to preserve the stability of the system.
(At least) Three simple reasons to fear inflation
Tommaso Monacelli, 20 March 2008
Inflation is rising throughout the world, with many blaming the Federal Reserve for its allegedly overly expansionary monetary policy. There are at least three arguments suggesting that the current inflationary surge is potentially dangerous: wage pressures, commodity prices, and the financial crisis.
Can monetary policy really be used to stabilise asset prices?
Katrin Assenmacher-Wesche, Stefan Gerlach, 12 March 2008
The subprime crisis and falling property prices in the US and elsewhere have put central banks back in the firing line.1 Many commentators are noting that asset price booms, in particular those affecting residential property prices, have triggered many previous episodes of financial instability (Ahearne et al. 2005, Goodhart and Hofmann 2007).
Does well-designed monetary policy encourage risk taking?
Stephen Cecchetti, 3 December 2007
Yes, but isn’t that what it’s supposed to do?
Subprime Series, part 3: Why central banks should be financial supervisors
Stephen Cecchetti, 30 November 2007
Central bankers regularly describe price stability as an essential foundation for maximum sustainable growth. Well, financial stability is another one. In fact, without a stable, well-functioning, financial system, there is no way that an economy can flourish. A well-functioning financial system is like the plumbing. When it works we take it for granted; when it doesn’t, watch out.
There is more to central banking than inflation targeting
Paul De Grauwe, 14 November 2007
The credit crisis that hit the world economy in August teaches us many lessons about the workings of integrated financial markets. It also teaches us a lesson about the responsibilities of central banks.1
The Central Bank as the Market Maker of last Resort: From lender of last resort to market maker of last resort
Willem Buiter, Anne Sibert, 13 August 2007
When banks were the main providers of credit, the financial stability mandate of central banks could be summarised as their lender of last resort function: in times of crisis, lend freely, at a penalty rate and against collateral that would be good in normal times but may be impaired in times of crisis.1 The counter
- Fiscal consolidation: At what speed?Blanchard, Leigh
- Public debt and economic growth, one more timePanizza, Presbitero
- Escaping liquidity traps: Lessons from the UK’s 1930s escapeCrafts
- The lessons of the North Atlantic crisis for economic theory and policyStiglitz
- Rethinking macroeconomic policyBlanchard
- A tale of two depressions: What do the new data tell us? February 2010 updateEichengreen, O’Rourke
- Educated in America: College graduates and high school dropoutsHeckman, LaFontaine
- Eurozone breakup would trigger the mother of all financial crisesEichengreen
- Debt, deleveraging, and the liquidity trap: A new modelKrugman
- Panic-driven austerity in the Eurozone and its implicationsDe Grauwe, Ji
Reichlin, Baldwin, 14 April 2013
Reichlin, Turner, Woodford
CEPR Policy Research
- The "Greatest" Carry Trade Ever? Understanding Eurozone Bank RisksAcharya, Steffen
- Political Credit Cycles: The Case of the Euro ZoneFernández-Villaverde, Garicano, Santos
- Winning by Losing: Incentive Incompatibility in Multiple QualifiersDagaev, Sonin
- Income and schoolingBrückner, Gradstein
- Monetary Policy and Rational Asset Price BubblesGalí