Financial Imbalances, Crisis Probability and Monetary Policy in Norway

Arbeitspapier

We assess the strength of the impact of a monetary policy shock on financial crisis probability in Norway. Policy effects go via the interest rate impact on credit, house prices and banks' wholesale funding. We find that the impact of a monetary policy shock on crisis probability is about 10 times larger than what previous studies suggest. The large impact is mostly due to a fall in property prices and banks' wholesale funding in response to a contractionary monetary policy shock. In contrast, and in line with existing literature, there is a more limited contribution to reduced crisis probability from the impact of monetary policy on credit.

Object Details

• ISBN: 978-82-8379-005-4
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 21/2017

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications ; Financial Markets and the Macroeconomy ; Monetary Policy
• Subject: structural VAR ; financial imbalances ; financial crisis ; monetary policy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Alstadheim, Ragna ; Robstad, Ørjan ; Vonen, Nikka Husom
• Event: Veröffentlichung
• (who): Norges Bank
• (where): Oslo
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/210131
• Last update: 10.03.2025, 11:42 AM CET