US policy having a larger impact on credit – BIS paper
Monetary policy’s effects on credit have grown, while the impact on inflation has weakened
The trade-offs facing monetary policymakers in the US have undergone “substantial changes” since the mid-1980s, a recent working paper published by the Bank for International Settlements (BIS) finds.
In particular, authors Boris Hofmann and Gert Peersman find the effects of policy on the price level have diminished relative to effects on GDP – reflecting a flattening of the Phillips curve – while the effects of policy on credit and house prices, relative to those on the macroeconomy, have risen
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