The Andrew Crockett Memorial Lecture and panel discussion
The Andrew Crockett Memorial Lecture, delivered by Professor Jeremy C Stein (Moise Y Safra Professor of Economics, Harvard University), on the occasion of the Bank's Annual General Meeting, Basel, 25 June 2023.
The Andrew Crockett Memorial Lecture
Lecture delivered by Professor Jeremy C Stein, Moise Y Safra Professor of Economics, Harvard University
Chair: Agustín Carstens, General Manager, BIS
Abstract
Recent research has found that monetary policy works in part by influencing the risk premiums on both traded financial-market securities and intermediated loans. Research has also shown that, when risk premiums are compressed, there is an increased likelihood of a reversal that damages the credit-supply mechanism and the real economy. Together these effects create an intertemporal trade-off for monetary policy, as stimulating the economy today can sow the seeds of a future downturn that might be difficult to offset. I draw out some implications of this trade-off for the conduct of monetary policy.
Based on paper: Monetary Policy When the Central Bank Shapes Financial-Market Sentiment, Journal of Economic Perspectives, winter 2023.
Panel discussion
Chair: Agustín Carstens, General Manager, BIS
Panellists: Christine Lagarde, President, European Central Bank; Amir Yaron, Governor, Bank of Israel; John C Williams, President, Federal Reserve Bank of New York