Systemic Risk Centre Seminar
Date: Monday, 21st November 2022 Time: 1.00 - 2.00pm GMT
Venue: Room 1.06, The Conference Room, 1st floor, Marshall Building (map)
Speaker: Gianluca Benigno (University of Lausanne and Federal Reserve Bank of New York)
Seminar title: The Financial (In)Stability Real Interest Rate, R**
Abstract: We introduce the concept of financial stability real interest rate using a macroeconomic banking model with an occasionally binding financing constraint as in Gertler and Kiyotaki (2010). The financial stability interest rate, r**, is the threshold interest rate that triggers the constraint being binding. We discuss r** and its dynamics, and show that persistently low real rates induce an increase in financial vulnerabilities and a consequent decline in the level of r**. We also provide a measure of r** for the US economy and discuss its evolution over the past 50 years, highlighting that during periods of financial stress that are associated with a decline in r** , the real rate tracks r** - a feature of monetary policy known as “Greenspan's put”.
A light lunch is provided.
This event is provided in-person only. It is a public event, free and open to all but pre-registration is required. Registration will close on Thursday, 17th November, 12:00pm GMT.