Fed’s Kohn on the links between macro and financial stability
Macroeconomic stability does not guarantee financial stability and can, in certain instances, undermine it, Don Kohn, the vice chairman of the Federal Reserve, has said.
Speaking on Sunday, Kohn noted that macroeconomic stability could serve to undermine financial stability by lulling people into complacency about risks.
He also noted that the crisis had revealed that some shocks to the financial system are "so substantial that decreases in aggregate demand can be large, long lasting, and not
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