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Liquidity and foreing asset management challenges for Latin America countries
The Global Financial Crisis put to the fore the challenges of managing liquidity and foreign assets at times of heightened volatility. Earlier concerns of some observers regarding the costs of precautionary hoarding notwithstanding the Global Financial Crisis (GFC) validated the buffer value of ...
International aspects of the zero lower bound constraint
Large negative aggregate demand shocks can drive down an economy’s equilibrium real interest rate and if the central bank is committed to stabilizing inflation monetary policy may be hampered by the zero lower bound on nominal interest rates –the economy may be in a 'liquidity trap.' The policy dilemma ...
Global liquidity spillovers to emerging markets and policy responses: an overview
Global liquidity has become a popular concept in academic and policy discussions of recent years. This concept captures overall 'ease of financing' prevalent in the world economy (Caruana 2013) and it is usually mentioned as a possible cause of capital inflows global imbalances excessive credit expansion ...
The 1997-98 liquidity crisis: Asia versus Latin America
Four years after its outbreak, the Asian crisis continues to confound experts: a region whose countries had long been considered paragons of successful economic development is mired in financial collapse and deep recession. By contrast, Latin America -with the important exceptions of Brazil and Ecuador- ...
Bernanke's no-arbitrage argument revisited: can open market operations in real assets eliminate the liquidity trap?
This paper looks back on the professional consensus about monetary policy at the zero bound prior to the 2008 crisis and proposes a calibrated model that provides one interpretation to explain why it was somewhat off base. The general consensus in the economics profession in the late 1990s when Japan ...
Fiscal multipliers and policy coordination
This paper is about an economy in a liquidity trap that is an environment with a zero nominal interest rate deflationary pressures and subpar growth. The paper shows two fiscal policy multipliers in a relatively standard New Keynesian liquidity trap economy with taxation costs. It computes real ...
Adapting macroprudential policies to global liquidity conditions
The global financial crisis that erupted in 2007 has had intellectual repercussions as well as large economic costs. Recent events in the advanced economies especially the capital flow reversals and the looming banking sector crises in Europe have shaken the conviction that traditional yardsticks of ...
Fiscal deficits debt and monetary policy in a liquidity trap
The dramatic policy response to the 2008-09 global economic crisis from many countries has revived some old debates about the use of fiscal and monetary policy in fighting recessions. The central dilemma for policy-makers in Japan North America and Europe has been to try to counter a large recession ...
Funding liquidity risk in a quantitative model of systemic stability
The global financial crisis of 2007–09 has illustrated the importance of including funding liquidity feedbacks in any model of systemic risk. This paper illustrates how we have incorporated such channels into a risk assessment model for systemic institutions (RAMSI) and it outlines the Bank of England’s ...
The liquidity approach to bubbles crises jobless recoveries and involuntary unemployment
Future generations will likely remember the turn of the 21st century as the time when mainstream macroeconomics was about to completely remove money and finance from its models and perished in the attempt. Before the subprime crisis macroeconomic/monetary theory reached a level of pristine perfection ...