Search Results
Speech
Financial Stability Factors and the Severity of the Current Recession [UBS European Virtual Conference]
Economic shocks happen, but the severity of the consequences depends on how fragile, or susceptible to financial instability, the economy was prior to the shock. In the U.S., excessive risk-taking behavior prior to COVID-19 is likely to delay the recovery, even though the initial response by fiscal and monetary policymakers was a prompt and substantial mitigant.
Speech
Financial Stability Factors and the Severity of the Current Recession [Annual Robert Glauber Lecture]
With many central banks focused on keeping interest rates low for an extended period to achieve their mandates – for example in the last recovery – it is particularly important to watch for reaching-for-yield behavior and excessive risk-taking. Easy monetary policy requires more guardrails protecting against rising financial stability risks. Without financial stability governance and tools, recessions have the potential to be more severe and fall disproportionately on those that can least afford it. And the recessions are likely to be deeper and longer, requiring more fiscal and monetary ...
Working Paper
Sowing the Seeds of Financial Imbalances: The Role of Macroeconomic Performance
The seeds of financial imbalances are sown in times of buoyant economic growth. We study the link between macroeconomic performance and financial imbalances, focusing on the experience of the United States since the 1960s. We first follow a narrative approach to review historical episodes of significant financial imbalances and find that the onset of financial disturbances typically occurs when the economy is running hot. We then look for evidence of a statistical link between measures of macroeconomic conditions and financial imbalances. In our in-sample analysis, we find that strong ...