Policymakers often use the output gap, a noisy signal of economic activity, as a guide for setting monetary policy. Noise in the data argues for policy caution. At the same time, the zero bound on nominal interest rates constrains the central bank’s ability to stimulate the economy during downturns. In such an environment, [...]
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Posted on April 15th, 2012
Posted on December 13th, 2011
In the wake of the recent financial crisis, a widespread discussion has arisen as to how much capital banks need to hold to better withstand financial difficulties. With this in mind the Sveriges Riksbank (Swedish Central Bank) has studied the balance between the long-term benefits and costs to society of more capital in [...] 1 pages
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