ERC Starting Grant project by Isaac Baley (UPF and BSE)
With year-on-year inflation rates reaching 10% in 2022, central banks in Europe and the United States started raising monetary policy rates to ensure price stability. The failure of Silicon Valley Bank (SVB) on March 10, 2023, however, laid bare the financial stability risks from hiking interest rates after a prolonged period of rate cuts. For…
Frédéric Boissay, Fabrice Collard, Jordi Galí, and Cristina Manea study whether the central bank should deviate from its traditional price stability objective to promote financial soundness, using a New Keynesian model augmented with capital accumulation and allowing for microfounded endogenous financial crises.
Jordi Galí, Giovanni Giusti and Charles N. Noussair conduct a laboratory experiment to study the effects of monetary policy on asset prices.