(...) the latest issue (No. 115) of the ECB Research Bulletin, entitled “Quantifying financial stability risks for monetary policy”

Sulkhan Chavleishvili (Aarhus University), Manfred Kremer and Frederik Lund-Thomsen (both European Central Bank, Directorate General Research) sketch a novel empirical approach to quantify the macroeconomic costs and benefits of monetary policies which takes financial stability considerations explicitly into account. 

Financial stability trade-offs enter the policy calculus through their direct effects on future inflation and economic activity. 

Their approach allows monetary policymakers to adopt a risk management perspective when confronted with elevated macroeconomic tails risks associated with certain risks to financial stability.

The ECB Research Bulletin features a selection of recent work on policy-relevant topics by ECB economists. Published on a monthly basis, the articles in the Research Bulletin are intended for a general audience. The views expressed in each article are those of the authors and do not necessarily represent the views of the European Central Bank and the Eurosystem. (...)