Seminar
Past
The Financial (In)Stability Real Interest Rate, R**
Gianluca Benigno (University of Lausanne)
- Date22 September 2026
- Time 10h30 - 11h30
- Room Online and in Room 1 Driant
Résumé
We build a macro-finance model with an occasionally binding financing constraint where real interest rates have opposite effects on current and future financial stability, with the contemporaneous impact driven by valuation effects (akin to those triggering the 2023 banking turmoil) and the future impact driven by reach-for-yield by intermediaries. We use this model to illustrate the concept of the financial stability interest rate, r**, which we propose as a quantitative summary statistic for financial vulnerabilities. We provide a measure of r** for the U.S. economy and discuss its evolution over the past fifty years.
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