The U.S. Monetary Policy Forum, an annual conference that brings
together academics, market economists and Federal Reserve policymakers
to discuss U.S. monetary policy, today released its 2008 report on
matters confronting the Federal Open Market Committee (FOMC).
The report, entitled "Leveraged Losses: Lessons from the Mortgage
Market Meltdown" is available at two websites:
http://www.brandeis.edu/ibs/monetarypolicy and
http://research.chicagogsb.edu/igm/events/
conferences/2008-usmonetaryforum.aspx. (Due to its length, this URL
may need to be copied/pasted into your Internet browser´s address
field. Remove the extra space if one exists.)
"This year´s report aims to draw some lessons from the recent
credit market crisis for central bankers," said Anil Kashyap, a
professor of economics and finance at the University of Chicago
Graduate School of Business and co-director of the Forum.
The report characterizes the disruptions in the financial markets
and compares these dislocations to previous periods of financial
stress. It confirms the view that the current problems in financial
markets are concentrated in institutions that have exposure to
mortgage securities and uses several methods to estimate the ultimate
losses on these securities. The best guess is that the losses will
total about $400 billion, with about half being borne by leveraged
financial institutions. The report explores the feedback from credit
availability to the broader economy and provides new evidence that
contractions in financial institutions balance sheets´ cause a
reduction in real GDP growth.
The report was prepared by David Greenlaw, chief U.S. fixed income
economist, Morgan Stanley, Jan Hatzius, chief U.S. economist, Goldman
Sachs, Anil Kashyap, professor of economics and finance, The
University of Chicago Graduate School of Business, and Hyun Shin,
professor of economics, Princeton University
The U.S. Monetary Policy Forum conference is sponsored by the
Rosenberg Institute of Global Finance at the Brandeis International
Business School, and the Initiative on Global Markets at the
University of Chicago Graduate School of Business.
