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“Best Research Environment 2024”: IWH Financial Markets Department among the winning teams The IWH Financial Markets Department is one of ten scientific teams to receive the…

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Charts

Info Graphs Sometimes pictures say more than a thousand words. Therefore, we selected a few graphs to present our main topics visually. If you should have any questions or would…

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On the Institutional Safeguarding of Monetary Policy – a Post-Keynesian Perspective

A. Heise, Toralf Pusch
International Journal of Public Policy, No. 1, 2011
Abstract
The paper takes a fresh look at the governance of the most important macroeconomic objectives: price stability and full employment. On the basis of a post-Keynesian market constellations approach, the necessity and institutional requirements of the coordination of macroeconomic policy areas in general and an optimal central bank setting in particular are analysed, and an amelioration of monetary policy of the neo-Keynesian ‘new macroeconomic consensus’ is provided.
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In Search for Yield? New Survey-Based Evidence on Bank Risk Taking

Claudia M. Buch
CESifo Working Paper No. 3375, 2011
published in: Journal of Economic Dynamics and Control
Abstract
There is growing consensus that the conduct of monetary policy can have an impact on financial and economic stability through the risk-taking incentives of banks. Falling interest rates might induce a “search for yield” and generate incentives to invest into risky activities. This paper provides evidence on the link between monetary policy and commercial property prices and the risk-taking incentives of banks. We use a factor-augmented vector autoregressive model (FAVAR) for the U.S. for the years 1997-2008. We include standard macroeconomic indicators and factors summarizing information provided in the Federal Reserve’s Survey of Terms of Business Lending. These data allow modeling the reactions of banks’ new lending volumes and the riskiness of new loans. We do not find evidence for a risk-taking channel for the entire banking system after a monetary policy loosening or an unexpected increase in property prices. This masks, however, important differences across banking groups. Small domestic banks increase their exposure to risk, foreign banks lower risk, and large domestic banks do not change their risk exposure.
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