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Liquidity, Default and the Interaction of Financial Stability and Monetary Policy

Ch. 10. P. 153–168.
Peiris U., Tsomocos D., Vardoulakis A.
In press

“Default is to macro-economics what sin is to theology: regrettable but central and essential”. The contemporaneous assessment of both liquidity and default within a framework of missing financial markets, multiple currencies, heterogeneous economic actors (i.e., investors, firms and intermediaries) and multiple externalities is warranted for analysing the interplay of financial and price stability. Thus, the complementarity and substitutability of regulatory and monetary policies can be identified and dissected. The optimal policy mix may be subsequently determined given the objectives of the fiscal and monetary authorities.

Language: English
DOI
Keywords: central bankingmacroprudential policy
Publication based on the results of:
Research in Financial Economics: Effect of political influence on financial performance, dividend payout policy of companies after introduction of international accounting standards, reconsidering the Fisher equation, strategic trading and price discovery (2018)

In book

The Changing Fortunes of Central Banking
Cambridge University Press, 2018.
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