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Journal Articles American Economic Review: Insights Year : 2021

Leaning against the Wind and Crisis Risk


Can central banks defuse rising stability risks in financial booms by leaning against the wind with higher interest rates? This paper studies the state-dependent effects of monetary policy on financial crisis risk. Based on the near-universe of advanced economy financial cycles since the nineteenth century, we show that discretionary leaning against the wind policies during credit and asset price booms are more likely to trigger crises than prevent them.

Dates and versions

hal-03944470 , version 1 (18-01-2023)


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Moritz Schularick, Lucas ter Steege, Felix Ward. Leaning against the Wind and Crisis Risk. American Economic Review: Insights, 2021, 3 (2), ⟨10.1257/aeri.20200310⟩. ⟨hal-03944470⟩
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