Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/262053 
Year of Publication: 
2022
Series/Report no.: 
Staff Report No. 1003
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
This paper reviews literature on the empirical relationship between vulnerabilities in the financial system and the macroeconomy, and how monetary policy affects that connection. Financial vulnerabilities build up over time, with both risk appetite and risk taking rising during economic expansions. To some extent, financial crises are predictable and have severe real economic consequences when they occur. Empirically it is difficult to link monetary policy to financial vulnerabilities, in part because financial cycles have long durations, making it difficult to separate effects of changes in monetary policy from other business cycle effects.
Subjects: 
monetary policy
financial stability
financial crises
credit
leverage
liquidity
asset prices
JEL: 
E44
E52
E58
G2
Document Type: 
Working Paper

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