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Monetary Policy Under Financial Turbulence: an Overview

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  • Luis Felipe Céspedes
  • Roberto Chang
  • Diego Saravia

Abstract

The last financial crisis revealed that financial imperfections and institutions play a more important role than the literature has assigned them for a long time, and it is possible to ascertain strongly that in the coming years macroeconomic research will be dominated by the study of the relationships between financial frictions, financial systems and aggregate fluctuations. This paper conducts a selective review of existing literature on monetary policy and its interaction with financial variables. It then examines frontier research presented at the XIII Annual Conference of the Central Bank of Chile, which gathers new theoretical results and empirical evidence applicable both in developed countries and in the Chilean economy

Suggested Citation

  • Luis Felipe Céspedes & Roberto Chang & Diego Saravia, 2010. "Monetary Policy Under Financial Turbulence: an Overview," Working Papers Central Bank of Chile 594, Central Bank of Chile.
  • Handle: RePEc:chb:bcchwp:594
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    References listed on IDEAS

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    1. Markus K. Brunnermeier & Lasse Heje Pedersen, 2009. "Market Liquidity and Funding Liquidity," Review of Financial Studies, Society for Financial Studies, vol. 22(6), pages 2201-2238, June.
    2. Gertler, Mark & Kiyotaki, Nobuhiro, 2010. "Financial Intermediation and Credit Policy in Business Cycle Analysis," Handbook of Monetary Economics,in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 11, pages 547-599 Elsevier.
    3. Stijn Claessens & M. Ayhan Kose & Marco E. Terrones, 2011. "Recessions and Financial Disruptions in Emerging Markets: A Bird’s Eye View," Central Banking, Analysis, and Economic Policies Book Series,in: Luis Felipe Céspedes & Roberto Chang & Diego Saravia (ed.), Monetary Policy under Financial Turbulence, edition 1, volume 16, chapter 4, pages 059-104 Central Bank of Chile.
    4. Olivier Jeanne & Lars E. O. Svensson, 2007. "Credible Commitment to Optimal Escape from a Liquidity Trap: The Role of the Balance Sheet of an Independent Central Bank," American Economic Review, American Economic Association, vol. 97(1), pages 474-490, March.
    5. Markus K. Brunnermeier, 2009. "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 77-100, Winter.
    6. Luis Felipe Céspedes & Roberto Chang & Diego Saravia, 2011. "Monetary Policy under Financial Turbulence: An Overview," Central Banking, Analysis, and Economic Policies Book Series,in: Luis Felipe Céspedes & Roberto Chang & Diego Saravia (ed.), Monetary Policy under Financial Turbulence, edition 1, volume 16, chapter 1, pages 001-021 Central Bank of Chile.
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    Cited by:

    1. Luis F. Céspedes & Javier García-Cicco & Diego Saravia, 2014. "Monetary Policy at the Zero Lower Bound: The Chilean Experience," Central Banking, Analysis, and Economic Policies Book Series,in: Sofía Bauducco & Lawrence Christiano & Claudio Raddatz (ed.), Macroeconomic and Financial Stability: challenges for Monetary Policy, edition 1, volume 19, chapter 13, pages 427-460 Central Bank of Chile.
    2. Stephanie Schmitt-Grohe & Martin Uribe, 2012. "Prudential Policy for Peggers," NBER Working Papers 18031, National Bureau of Economic Research, Inc.
    3. Christopher Otrok & Gianluca Benigno & Huigang Chen & Alessandro Rebucci & Eric R. Young, 2012. "Capital Controls or Exchange Rate Policy? A Pecuniary Externality Perspective," Working Papers 1209, Department of Economics, University of Missouri.
    4. Schmitt-Grohé, Stephanie & Uribe, Martín, 2012. "Prudential Policy for Peggers," CEPR Discussion Papers 8961, C.E.P.R. Discussion Papers.
    5. Benigno, Gianluca & Chen, Huigang & Otrok, Christopher & Rebucci, Alessandro & Young, Eric R., 2013. "Financial crises and macro-prudential policies," Journal of International Economics, Elsevier, vol. 89(2), pages 453-470.
    6. Yan Carriere-Swallow & Pablo Garcia-Silva, 2013. "Capital Account Policies in Chile Macro-financial considerations along the path to liberalization," IMF Working Papers 13/107, International Monetary Fund.
    7. Viral V. Acharya & Denis Gromb & Tanju Yorulmazer, 2012. "Imperfect Competition in the Interbank Market for Liquidity as a Rationale for Central Banking," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(2), pages 184-217, April.
    8. Jean Pierre Allegret, 2012. "Responses of Monetary Authorities in Emerging Economies to International Financial Crises: What Do We Really know?," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 3-32.
    9. Luis Felipe Céspedes & Roberto Chang & Diego Saravia, 2011. "Monetary Policy under Financial Turbulence: An Overview," Central Banking, Analysis, and Economic Policies Book Series,in: Luis Felipe Céspedes & Roberto Chang & Diego Saravia (ed.), Monetary Policy under Financial Turbulence, edition 1, volume 16, chapter 1, pages 001-021 Central Bank of Chile.
    10. Javier García-Cicco & Enrique Kawamura, 2014. "Central Bank Liquidity Management and “Unconventional” Monetary Policies," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Fall 2014), pages 39-87, June.
    11. Javier Garcia-Cicco, 2011. "On the Quantitative Effects of Unconventional Monetry Policies in Small Open Economies," International Journal of Central Banking, International Journal of Central Banking, vol. 7(1), pages 53-115, March.
    12. Damián Romero & Luis Ceballos, 2014. "The Yield Curve Information Under Unconventional Monetary Policies," Working Papers Central Bank of Chile 732, Central Bank of Chile.
    13. Anton Korinek & Enrique G. Mendoza, 2013. "From Sudden Stops to Fisherian Deflation: Quantitative Theory and Policy Implications," NBER Working Papers 19362, National Bureau of Economic Research, Inc.
    14. Anton Korinek, 2011. "The New Economics of Capital Controls Imposed for Prudential Reasons+L4888," IMF Working Papers 11/298, International Monetary Fund.
    15. Mitsuru Katagiri & Ryo Kato & Takayuki Tsuruga, 2012. "Managing Financial Crises: Lean or Clean?," IMES Discussion Paper Series 12-E-16, Institute for Monetary and Economic Studies, Bank of Japan.
    16. Andrés Fernández & Alessandro Rebucci & Martín Uribe, 2013. "Are Capital Controls Prudential? An Empirical Investigation," NBER Working Papers 19671, National Bureau of Economic Research, Inc.
    17. Kuang-Liang Chang & Nan-Kuang Chen & Charles Ka Yui Leung, 2015. "Losing track of the asset markets: the case of housing and stock," ISER Discussion Paper 0932, Institute of Social and Economic Research, Osaka University.
    18. Carrière-Swallow, Yan & Céspedes, Luis Felipe, 2013. "The impact of uncertainty shocks in emerging economies," Journal of International Economics, Elsevier, vol. 90(2), pages 316-325.

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