A model to analyse stability
Conceptual and measurement-related difficulties that emerged during financial crisis underpin the Reserve Bank of New Zealand's so-called "cobweb model" to study financial stability, a paper on the model states.
The paper outlines the process of constructing the model and argues that the end result would indicate risk of shocks in the financial sector severe enough to cause the failure of an institution.
The paper notes two broad categories of quantitative indicator, the first focusing on
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