Procyclicality in the financial system: do we need a new macrofinancial stabilisation framework?

William White

No 193, BIS Working Papers from Bank for International Settlements

Abstract: The successful pursuit of the objective of low inflation by central banks in recent decades has also delivered low variability of both inflation and output. At the same time, numerous financial and other "imbalances" (defined here as significant and sustained deviations from historical norms) have emerged. Should these imbalances revert to the mean, there could be significant effects on output growth. Although such an adverse outcome remains only a possibility, the question asked in this paper is whether we might still benefit from a new macrofinancial stabilisation framework in which monetary and regulatory policies gave more attention to avoiding the emergence of imbalances in the first place.

Keywords: economic policy; financial stability (search for similar items in EconPapers)
JEL-codes: E44 E50 E60 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2006-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (51)

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