Can aggressive contractionary policy create financial instability?

Monetary policy in emerging markets: Can liability dollarization explain contractionary devaluations? Author & abstract; Download; 37 References; 74 Citations ... Nov 16, 2023 ... We find that contractionary monetary policy is more pronounced and persistent when the reaction function of the central bank is augmented with ... Oct 12, 2022 ... Contractionary fiscal policy: In contractionary fiscal policy, the government taxes more than it spends—either by increasing tax rates, ... A contractionary monetary policy will raise interest rates, discourage borrowing for investment and consumption spending, and cause the original demand curve ( ... Mar 11, 2024 ... ... monetary policy work their way through the economy. Risks to ... contractionary fiscal stance in the euro area in 2025. This would be ... Monetary policy is often referred to as being either expansionary (stimulating economic activity and consequently employment and inflation) or contractionary ( ... A contractionary policy is a monetary measure to reduce government spending or the rate of monetary expansion by a central bank. This is called contractionary fiscal policy. 9. During times of inflation, by selling government bonds and raising reserve requirements, the discount rate, and ... Similarly, a monetary tightening only reduces inflation and output when accompanied by contractionary fiscal policy. These results are robust to several ... At the same time, the unemployment rate is very low. In this case, the Fed might decide to use contractionary monetary policy to bring inflation back to the ...