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Consideration on the price stability – financial stability relationship in the context of financial globalization

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  • Marius Constantin Apostoaie

Abstract

This study is focused upon the involvement of the central banks regarding the fulfillment of the two main objectives: price stability and financial stability. These two key concepts are part of an old and ongoing debate that the current turmoil has revived, and that is whether monetary policy should aim, or not, at ensuring financial stability in parallel to its main objective of price stability. On both sides there are solid and well known arguments. In the beginning of the study I have considered a literature review with regard to price and financial stability issues. After that I have tried to shed some light (from a theoretical point of view) on the nature and dynamics of the fundamental interlinkages between the two aspects and there implications on the central banks and the economy. Finally I outline some general conclusions that have emerged in the present study.

Suggested Citation

  • Marius Constantin Apostoaie, 2010. "Consideration on the price stability – financial stability relationship in the context of financial globalization," Studies and Scientific Researches. Economics Edition, "Vasile Alecsandri" University of Bacau, Faculty of Economic Sciences, issue 15.
    • Handle: RePEc:bac:fsecub:10-15-01
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    References listed on IDEAS

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    1. Akram, Q. Farooq & Eitrheim, Øyvind, 2008. "Flexible inflation targeting and financial stability: Is it enough to stabilize inflation and output?," Journal of Banking & Finance, Elsevier, vol. 32(7), pages 1242-1254, July.
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    7. Claudio Borio & William English & Andrew Filardo, 2003. "A tale of two perspectives: old or new challenges for monetary policy?," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy in a changing environment, volume 19, pages 1-59, Bank for International Settlements.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Price stability; financial stability; central banks; monetary policy; primary objective; financial turmoil; financial system; financial globalisation;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises

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