Studies from Federal Reserve Bank Yield New Information about Economics (Liquidity Traps, Prudential Policies, and International Spillovers): Economics

2026 JUL 14 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Data detailed on Economics have been presented. According to news reporting from Minneapolis, Minnesota, by NewsRx journalists, research stated, “We investigate optimal monetary and macroprudential policies in an open economy with aggregate demand externalities and an occasionally binding zero lower bound constraint. Our analysis highlights that the optimal policy balances output stabilization and capital flow management.”

The news correspondents obtained a quote from the research from Federal Reserve Bank, “When macroprudential policy is available, monetary policy stabilizes the output gap. By contrast, when macroprudential policy is not available, monetary policy is used prudentially. However, contrary to a widespread view, raising the interest rate is not necessarily the optimal prudential policy.”

According to the news reporters, the research concluded: “Finally, we show that international spillovers operate through the world real rate, but macroprudential policies provide insulation from the adverse effects of foreign policies.”

This research has been peer-reviewed.

For more information on this research see: Liquidity Traps, Prudential Policies, and International Spillovers. Review of Economic Studies, 2026. Review of Economic Studies can be contacted at: Oxford Univ Press, Great Clarendon St, Oxford OX2 6DP, England. (Oxford University Press - http://www.oup.com/; Review of Economic Studies - restud.oxfordjournals.org)

Our news journalists report that additional information may be obtained by contacting Javier Bianchi, Federal Reserve Bank, Minneapolis, MN 55401, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1093/restud/rdag054. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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