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Tuesday, August 4, 2020 | History

2 edition of Aggregate price shocks and financial instability found in the catalog.

Aggregate price shocks and financial instability

Michael D. Bordo

Aggregate price shocks and financial instability

an historical analysis

by Michael D. Bordo

  • 327 Want to read
  • 30 Currently reading

Published by National Bureau of Economic Research in Cambridge, MA .
Written in English

    Subjects:
  • Prices -- United States -- History -- Econometric models.,
  • Financial crises -- United States -- History -- Econometric models.,
  • Inflation (Finance) -- United States -- History -- Econometric models.,
  • Price maintenance -- United States -- History -- Econometric models.

  • Edition Notes

    StatementMichael D. Bordo, Michael J. Dueker, David C. Wheelock.
    SeriesNBER working paper series -- working paper 7652, Working paper series (National Bureau of Economic Research) -- working paper no. 7652.
    ContributionsDueker, Michael., Wheelock, David C., National Bureau of Economic Research.
    Classifications
    LC ClassificationsHB1 .W654 no. 7652
    The Physical Object
    Pagination27, [22] p. :
    Number of Pages27
    ID Numbers
    Open LibraryOL22399754M

      Associations between endogenous hormone levels and market price instability. To investigate whether high cortisol promoted price instability in male or mixed markets, we explored whether mean group cortisol levels were correlated with aggregate price volatility in the market. We focused on a standard measure called normalized absolute deviation (NAD) – the sum of the deviations of prices   system. The term "financial instability" is often poorly defined. Some argue that financial instability occurs when imperfections or externalities in the financial system are substantial enough to create significant risks for real aggregate economic performance. Others argue that financial stability is

    BibTeX @MISC{Bordo01photocourtesy, author = {Michael D. Bordo and Michael J. Dueker and David C. Wheelock and Michael D. Bordo and Michael J. Dueker and David C. Wheelock}, title = {Photo courtesy of The Gateway Arch, St. Louis, MO. regate Price Shocks and Financial Instability: A Historical Analysis}, year = {}}?doi=   Implicit in this formula- tion is the assumption that productivity shocks are stationary, and thus all instability is induced by inflation. Insofar as inflation introduces spurious elements in pricing, the qualitative properties of the results will be the same if the inflation shocks are allowed to interact with real

      CiteScore: ℹ CiteScore: CiteScore measures the average citations received per peer-reviewed document published in this title. CiteScore values are based on citation counts in a range of four years (e.g. ) to peer-reviewed documents (articles, reviews, conference papers, data papers and book chapters) published in the same four calendar years, divided by the number of When banks under-price risk, both firm and bank default rates are high and sequences of otherwise small shocks can push the economy into a financial crisis and a deep recession. In contrast, when banks take less risk, they remain resilient despite high corporate defaults and there is no strong amplification of aggregate ://


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Aggregate price shocks and financial instability by Michael D. Bordo Download PDF EPUB FB2

II. AGGREGATE PRICE SHOCKS AND FINANCIAL INSTABILITY Financial instability can have either monetary or non-monetary causes and may be solely domestic or spread among countries.

In the United States, the 19 Aggregate price shocks and financial instability book and early 20 centuries were punctuated by banking panics – episodes of widespread panic among depositors leading to bank ://   Abstract.

This paper presents empirical evidence on the hypothesis that aggregate price disturbances cause or worsen financial instability. We construct two annual indexes of financial conditions for the United States coveringand estimate the effect of aggregate price shocks on each index using a dynamic ordered probit ://?abstract_id= This paper presents empirical evidence on the hypothesis that aggregate price disturbances cause or worsen financial instability.

We construct two annual indexes of financial conditions for the United States coveringand estimate the effect of aggregate price shocks on each index using a dynamic ordered probit model. We find that price level shocks contributed to financial Downloadable.

This paper presents empirical evidence on the hypothesis that aggregate price disturbances cause or worsen financial instability. We construct two annual indexes of financial conditions for the United States coveringand estimate the effect of aggregate price shocks on each index using a dynamic ordered probit model.

We find that price level shocks contributed to   This paper presents empirical evidence on the hypothesis that aggregate price disturbances cause or worsen financial instability. We construct two annual indexes of financial conditions for the United States coveringand estimate the effect of aggregate price shocks on each index using a dynamic ordered probit :// Aggregate price shocks and financial instability.

Cambridge, MA: National Bureau of Economic Research, © (OCoLC) Material Type: Internet resource: Document Type: Book, Internet Resource: All Authors / Contributors: Michael D Bordo; Michael Dueker; David C Wheelock; National Bureau of Economic :// According to Bordo et al.

(), price level shocks had a considerable impact on financial instability in the UK [7]. However, the Bordo study is uni-dimensional and was only able to identify the We construct an annual index of financial conditions for the United States coveringand estimate the effect of aggregate price shocks on the index using a dynamic ordered probit model.

We find that price level shocks contributed to financial instability duringand that inflation rate shocks contributed to financial This article presents evidence on the relationship between price and financial stability. We construct an annual index of financial conditions for the United States,and estimate the effect of aggregate price shocks on the index using a dynamic ordered probit model.

We find that price-level shocks contributed to financial instability during and that inflation rate shocks   vulnerable to different types of aggregate shocks, including domestic shocks such as those resulting from poor macroeconomic policies, political instability or conflict, and exogenous shocks such as those related to financial contagion, terms of trade, natural disasters and climate :// We find that price level shocks contributed significantly to financial instability duringand that inflation rate shocks contributed to instability during Both the nature of aggregate price shocks and their impact depend on the existing monetary and financial regime, but price shocks historically have been a source of   Chapter Financial Frictions and Aggregate Instability Uribe & Schmitt-Groh´e No Amplification of Regular Shocks To illustrate lack of amplification of shocks of regular size, consider a negative unexpected output shock in t = 0 Initial condition: t ~mu/book/overborrowing/ This paper investigates aggregate price shocks on financial stability in the United Kingdom.

We construct an annual index of UK financial conditions for – and use a dynamic probit model Our objective is to shed light on the extent that aggregate price disturbances exacerbate financial instability, and whether the relationship between such disturbances and financial conditions is affected by the institutional environment.

We begin by outlining why aggregate price shocks might cause or worsen financial instability. instability. Anna Schwartz (, p. 53) argues that a central bank “that was able to maintain price stability would also incidentally minimize the need for lender-of-last-resort intervention.” Financial instability, according to Schwartz, has often been caused or made worse by fluctuations in the aggregate price   This paper examines the implications of monetary shocks and macroprudential shocks for aggregate financial fragility using a sign restricted VAR model estimated with US data spanning the period Q1–Q4.

financial instability hypothesis goes a step is the log of the book value of U.S. internal funds of the nonfinancial corporate   It contributes to financial risk” (p. 39), and she goes beyond debt-deflation à la Fisher () as she relates the end of price (hence financial) instability to sound monetary policy.

Woodford () also argues that monetary stability eliminates numerous sources of financial instability such as wage-price spirals. Nevertheless, to our Bordo, M., M. Dueker and D. Wheelock (), Aggregate price shocks and financial distress: an historical analysis, Fed of St.

Louis Working Paper Series, No. Borio, C. (), Monetary and financial stability: so close and yet so far?, National Institute Economic Review No What role does the financial system play in the economy.

Money is a vital resource. It needs to flow to where it can be used best. The financial system allows this to happen. The financial system is made up of different parts.

These include banks, other institutions (such as insurers) and the financial markets that connect them :// Aggregate Price Shocks and Financial Instability: An Historical Analysis. By Michael D. Bordo, Michael J. Dueker and David C. WheelockWe Thank Alton Gilbert, Bob Rasche, Joshua Rosenbloom, Anna Schwartz, Rick Sullivan, Tom Weiss, Michael D.

Bordo, Michael J. Dueker and David C. WheelockMichael D. Bordo. Schwartz does not formally model how changes in the inflation rate can lead to financial instability, but her description fits well with the monetary misperceptions model of Lucas ( and ).(2) In that model, individuals cannot distinguish (with certainty) shifts in relative prices from changes in the aggregate price ://+stability+and+financial+stability:+the+historical.It illustrates that the observedincrease in the real price of oil since can be attributed almost exclusivelyto unanticipated positive global aggregate demand shocks In contrast, thesharp decline after midwhile preceded by a slowing of world real activity, Figure 9: Explanatory Power of Oil Supply and Oil Demand Shocks for the   Oil Shocks and Aggregate Macroeconomic Behavior: The Role of Monetary Policy* June Revised: July James D.

Hamilton Department of Economics, University of California, San Diego La Jolla, CA [email protected] Ana Maria Herrera Michigan State University Department of Economics Marshall Hall East Lansing, MI ~jhamilto/bgwjunpdf.