We learned this month that the US Federal Reserve decided not to raise the countercyclical capital buffer required of banks above its current level of zero, even as the US economy is at a cyclical peak. It also removed “qualitative” ratings from its stress tests for US banks, but notRead More →

ABSTRACT In OECD countries, over the period 1980-2017, countries with lower debt-to-GDP ratios responded to financial difficulties with much more expansionary fiscal policy and suffered much less severe consequences. Two lines of evidence suggest that the relationship between debt ratio and policy response is determined in part by sovereign marketRead More →