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SUMMARY:Financial Cycles with Heterogeneous Intermediaries - Helene Rey (L
 ondon Business School)
DTSTART:20200514T120000Z
DTEND:20200514T130000Z
UID:TALK131335@talks.cam.ac.uk
CONTACT:CERF/CF Admin
DESCRIPTION:This paper develops a dynamic macroeconomic model with heterog
 eneous fi-\nnancial intermediaries and endogenous entry. It features time-
 varying endogenous\nmacroeconomic risk that arises from the risk-shifting 
 behaviour of the cross-section of financial intermediaries. We show that w
 hen interest rates are high\, a\ndecrease in interest rates stimulates inv
 estment and increases financial stability.\nIn contrast\, when interest ra
 tes are low\, further stimulus can increase aggregate risk while inducing 
 a fall in the risk premium. In this case\, there is a trade-off between st
 imulating the economy and financial stability.
LOCATION:Online
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