New York Fed report reviews risk-return trade-off between financial conditions and financial stability
Paper focuses on vulnerabilities affecting trade-off, including pricing of risk and leverage
A Federal Reserve Bank of New York staff report, published last week, reviews monetary policy transmission channels and financial frictions that the authors say "give rise to a risk-return trade-off" between financial conditions and financial stability.
Monetary Policy, Financial Conditions, and Financial Stability, by Tobias Adrian and Nellie Liang, focuses on vulnerabilities that affect the risk-return trade-off, including the pricing of risk, leverage, and maturity and liquidity mismatch. It
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