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Monitoring financial stability: a financial conditions index approach

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  • Scott Brave
  • R. Andrew Butters

Abstract

Monitoring financial stability requires an understanding of both how traditional and evolving financial markets relate to each other and how they relate to economic conditions. This article describes two new indexes of financial conditions that aim to quantify these relationships.

Suggested Citation

  • Scott Brave & R. Andrew Butters, 2011. "Monitoring financial stability: a financial conditions index approach," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 35(Q I), pages 22-43.
    • Handle: RePEc:fip:fedhep:y:2011:i:qi:p:22-43:n:v.35no.1
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    References listed on IDEAS

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    1. Stock J.H. & Watson M.W., 2002. "Forecasting Using Principal Components From a Large Number of Predictors," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 1167-1179, December.
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