Volume 16: Monetary Policy under Financial Turbulence

The financial crisis that started in 2007 brought the global economy to the brink, and in many respects it is still unfolding, especially in Europe. While a fierce debate continues on how to understand and deal with the crisis, a consensus is emerging with regard to the originating shocks, the mechanisms that amplified those shocks, and official policy responses, especially from central banks. The new consensus assigns a substantially bigger role to financial imperfections and institutions than was previously assumed, to the point that one can safely say that for the next several years, research on macroeconomic policy will be dominated by the interaction between financial frictions, the financial system, and aggregate fluctuations.
This volume gathers twelve contributions by distinguished scholars analyzing the causes of the crisis, the role of financial instruments and financial imperfections in its propagation, and the role that policymakers could play through the use of monetary and fiscal policies. These studies expand on theoretical and empirical issues surrounding the new consensus and identify significant lessons for macroeconomic and financial policy.

Edited by Luis Felipe Céspedes; Roberto Chang; Diego Saravia

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