Archive for June 30th, 2009

BIS reviews crisis and the policies

June 30, 2009

BIS reviews the crisis and the policy responses in its Annual Report 2008-09. As always, it is a lucid read with graphs and charts.

The failures that caused the crisis were broad-based. They included macroeconomic factors, such as large and persistent global current account imbalances and low real interest rates over a protracted period. And they also included microeconomic factors, such as flawed systems for measuring and managing risk, misaligned incentives and inadequate corporate governance at financial institutions. The result was a build-up of excessive leverage in the financial sector and in the household sector in a number of countries. Neither market discipline nor regulation and supervision were able to prevent these developments.


Handbook of inflation targeting frameworks

June 30, 2009

Gill Hammond of Bank of England has prepared a superb handbook. It tells you how inflation targeting (IT) is carried out in several countries.  I have always known that though it is one framework, there are numerous differences in the ways central banks achieve the target.

This handbook just confirms it. This paper is particularly good as it has compared all IT central banks across a few common points. It has prepapred a common chart for all the IT central banks and so it helps you compare immediately.

Superb Stuff.

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