Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
998329 | Journal of Financial Stability | 2011 | 8 Pages |
Abstract
The purpose of this paper is to assess the choice between adopting a monetary base or an interest rate setting instrument to maintain financial stability. Our results suggest that the interest rate instrument is preferable, since during times of a panic or financial crisis the Central Bank automatically satisfies the increased demand for money. Thus, it prevents sharp losses in asset values and enhanced asset volatility.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics, Econometrics and Finance (General)
Authors
C.A.E. Goodhart, P. Sunirand, D.P. Tsomocos,