Financial Regulation and Stability

Charles Goodhart, Emeritus Professor of Banking and Finance, and long-standing member of the Financial Markets Group, at the London School of Economics, UK and Dimitrios P. Tsomocos, Professor in Financial Economics and Fellow in Management, Saïd Business School and St. Edmund Hall, University of Oxford, UK

• Contents: 1. Introduction By Charles A. E. Goodhart and Dimitrios P. Tsomocos 2. “Principles for Macroprudential Regulation”, (A.K. Kashyap, D.P. Tsomocos and A.P. Vardoulakis), Banque de France Financial Stability Review, No.18, pp. 173-182, April 3. “The Macroprudential Toolkit”, (R. Berner, A. Kashyap and C.A.E. Goodhart), I.M.F. Economic Review, Vol. 59, No 2, 2011 4. “Financial Regulation in General Equilibrium”, (C.A.E. Goodhart, A.K. Kashyap, D.P. Tsomocos and A.P. Vardoulakis), NBER WP17909, University of Oxford, Said Business School, 2011 5. “An Integrated Framework for Multiple Financial Regulations”, (C.A.E.Goodhart, A.K. Kashyap, D.P. Tsomocos and A.P. Vardoulakis), International Journal of Central Banking, Vol. 9, Supplement 1, pp.109-143, 2013 6. “The Lender of Last Resort in a General Equilibrium Framework”, (Akshay Kotak, Han Ozsoylev and D.P.Tsomocos) Saïd Business School WP 2017-18 7. “A Reconsideration of Minsky's Financial Instability Hypothesis”, (with S. Bhattacharya, C.A.E. Goodhart and A.P.Vardoulakis), Journal of Money, Credit and Banking, Volume 47, Issue 5, pages 931{973, August 2015 8. “Liquidity and default in an exchange economy”, (Juan Francisco Martinez S. and D.P. Tsomocos), Journal of Financial Stability, In press, 2016 9. “Monetary Transaction Costs and the Term Premium”, (R. Espinoza and D. P. Tsomocos), Economic Theory 59(2), pp 355-375, June 2015 10. “Debt Defation Effects of Monetary Policy”, (Li Lin, D.P. Tsomocos and Alexandros Vardoulakis), Journal of Financial Stability 21 (2015): 81-94, also appeared as Federal Reserve Board Staff Working Paper (2014-37), May, 2014 11. “International Monetary Equilibrium with Default”, (M.U. Peiris and D. P. Tsomocos), Journal of Mathematical Economics 56, pp 47-57, 2015 12. “Global Capital Imbalances and Taxing Capital Flows”, (C.A.E. Goodhart, M.U. Peiris and D.P. Tsomocos), International Journal of Central Banking, Vol. 9, Number 2, pp.13-45, 2013 13. “International Monetary Regimes”, (C.A.E. Goodhart and D.P. Tsomocos), Capitalism and Society, Vol. 9, No. 2, Article 2, 2014 14. “Debt, Recovery Rates and the Greek Dilemma”, (C.A.E. Goodhart and M.U. Peiris and D.P. Tsomocos), Journal of Financial Stability, forthcoming Index

'The 2008 global financial crisis not only damaged the world economy, it also left in the dust most of the prevailing approaches to macroeconomics. Core models which dominated the previous decades of academic research had fatally disregarded the complex workings of the financial sector. Sifting through this intellectual wreckage forms the ongoing work for the next generation of macroeconomic theorists and empiricists. Among those leading the way forward are Charles Goodhart and Dimitrios Tsomocos. This outstanding compilation of their work showcases nontrivial models of banking, well-grounded concepts of liquidity and default, and lessons for equilibrium, regulation, and monetary policy in a set of tractable and insightful frameworks.'--Alan M. Taylor, University of California, Davis, US'This volume gathers in one place the key contributions of Goodhart and Tsomocos on the interplay between capital and liquidity regulations and related macroprudential tools, all in their trademark setting of a fully-fledged multi-period general equilibrium model. The command of the authors over the theory is complemented by their insightful applications of their ideas to recent events. It is required reading for theorists and practitioners alike.'--Hyun Song Shin, Bank for International Settlements (BIS), Switzerland'Default plays a determining role in the operation of financial markets and the allocation of resources under uncertainty. Martin Shubik pointed out the importance of default long ago, but it is recent work, most prominently by John Geanakoplos, that has placed default in the mainstream of research. Goodhart and Tsomocos incorporate theoretical insights into operational models of monetary policy and, in particular, of financial regulation.'--Herakles Polemarchakis, University of Warwick, UK