Monetary policy links to financial stability ‘are not straightforward', says Fed paper
A new paper from a Federal Reserve economist uses a "simple example" to examine the connections between financial stability and monetary policy, finding that even without an explicit financial stability goal, financial stability considerations can arise naturally in standard models of optimal monetary policy.
The paper, Monetary Policy and Financial Stability Risks: An Example, by James Clouse, goes on to caution that "the policy implications of this possible connection between monetary policy
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