5 Pages Posted: 30 Mar 2011
Date Written: March 2011
In our lectures we tried to shed light on the basic role of both monetary policy and financial regulation as drivers of the financial instability which characterized the years 2008-2009. We illustrated how a relatively limited default event – the subprime loan crisis in the United States – has domino effects on the overall world financial industry. In these notes we summarize our interpretation, presenting a very simple and teachable framework to address the macro relationship between default events, micro and macro drivers, regulatory amplification mechanisms and financial instability.
Suggested Citation: Suggested Citation
Masciandaro, Donato, Financial Instability, Monetary Policy and Regulation: A Primer (March 2011). Paolo Baffi Centre Research Paper No. 2011-86. Available at SSRN: https://ssrn.com/abstract=1797469 or http://dx.doi.org/10.2139/ssrn.1797469