Awarded the 13th BBVA Frontiers of Knowledge Award in Economics, Nobuhiro Kiyotaki analyzes how financial markets and credit availability affect the business cycle. His models explain why crises can be amplified through internal mechanisms and how financial frictions shape modern macroeconomics.
The BBVA Foundation Frontiers of Knowledge Award in the Economics, Finance and Management category has gone in this thirteenth edition to Ben S. Bernanke (The Brookings Institution, Washington DC), Mark Gertler (University of New York), Nobuhiro Kiyotaki (Princeton University) and John Moore (University of Edinburgh and London School of Economics) “for fundamental contributions to our understanding of how financial market imperfections can amplify macroeconomic fluctuations and generate deep macroeconomic recessions,” in the words of the award citation. In the above video, committee chair
Awarded the 13th BBVA Frontiers of Knowledge Award in Economics, Nobuhiro Kiyotaki analyzes how financial markets and credit availability affect the business cycle. His models explain why crises can be amplified through internal mechanisms and how financial frictions shape modern macroeconomics.
The BBVA Foundation Frontiers of Knowledge Award in the Economics, Finance and Management category has gone in this thirteenth edition to Ben S. Bernanke (The Brookings Institution, Washington DC), Mark Gertler (University of New York), Nobuhiro Kiyotaki (Princeton University) and John Moore (University of Edinburgh and London School of Economics) “for fundamental contributions to our understanding of how financial market imperfections can amplify macroeconomic fluctuations and generate deep macroeconomic recessions,” in the words of the award citation. In the above video, committee chair, Eric S. Maskin, Adams University Professor at Harvard University and Nobel Laureate in Economics, reads out the award citation.
00:00 Introduction
00:05 What is the Kiyotaki–Moore model, and how does it work?
00:48 Could you explain the main mechanism through which credit constraints can amplify small shocks in the economy?
01:39 Is this model a possible explanation for the financial crisis? It began with the housing crisis, but was it driven by the credit cycle and lenders’ positions?
02:29 How is this model related to monetary policy?
03:19 Is quantitative easing the solution to this type of vicious circle described in your model?
03:48 Did your research provide academic support for the unconventional monetary policies adopted by the Federal Reserve during the Great Recession?
04:39 Which macroprudential policies are the most effective for maintaining financial system stability today?
05:24 Can unconventional monetary policy be sustained for much longer? What might be its medium-term impact on the economy?
