BIS: Asset prices and banking distress

This BIS Working Paper links banking with asset prices in a monetary macroeconomic model. It finds that the effect of falling asset prices is indirect, non-linear, and involves feedback from the banking system in the form of a credit contraction. The case studies apply the model to Japan's Lost Decade, the Nordic Banking Crises, and the US Great Depression.

Click here to read the Working Paper "Asset prices and banking distress: a macroeconomic approach" on the BIS website

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