Capital Flows and the Risk-Taking Channel of Monetary Policy
AbstractWe study the dynamics linking monetary policy with bank leverage and show that adjustments in leverage act as the linchpin in the monetary transmission mechanism that works through fluctuations in risk-taking. Motivated by the evidence, we formulate a model of the "risk-taking channel" of monetary policy in the international context that rests on the feedback loop between increased leverage of global banks and capital flows amid currency appreciation for capital recipient economies.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18942.
Date of creation: Apr 2013
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Note: IFM ME
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Find related papers by JEL classification:
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-13 (All new papers)
- NEP-BAN-2013-04-13 (Banking)
- NEP-CBA-2013-04-13 (Central Banking)
- NEP-IFN-2013-04-13 (International Finance)
- NEP-MAC-2013-04-13 (Macroeconomics)
- NEP-MON-2013-04-13 (Monetary Economics)
- NEP-OPM-2013-04-13 (Open Economy Macroeconomic)
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- Alessandro Barattieri & Maya Eden & Dalibor Stevanovic, 2013.
"The Connection between Wall Street and Main Street: Measurement and Implications for Monetary Policy,"
Cahiers de recherche
- Barattieri, Alessandro & Eden, Maya & Stevanovi, Dalibor, 2013. "The connection between Wall Street and Main Street : measurement and implications for monetary policy," Policy Research Working Paper Series 6667, The World Bank.
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