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The ESM Research team is pleased to invite you to attend the hybrid seminar on: The Safety Net: Central Bank Balance Sheets and Financial Crises, 1587-2020 with Prof. Moritz Schularick 

This paper studies the evolution of central bank balance sheets over the past 400 years across 17 major economies. The size of central bank balance sheets has varied substantially over time relative to economic and financial activity. Major balance sheet expansions were initially associated with government finance in geopolitical emergencies, but over time liquidity provision during financial turmoil has become the key driver of balance sheet operations. We examine the historical record of such lender of last resort interventions with a novel identification strategy based on pre-determined ideological beliefs of acting central bank governors (“hawks” vs. “doves”) with respect to financial sector support. Using exogenous variation in the crisis response, we estimate the effects of lender of last resort operations on the economy. History shows that liquidity support during financial crises has indeed tended to stabilize the economy successfully: crises are less severe, asset prices recover more quickly, and deflation is avoided. However, there is also evidence that the provision of central bank liquidity to financial markets raises the probability of future boom-bust episodes, pointing to potential moral hazard effects of central bank intervention.
Date: Wednesday, 15 November from 14.15 until 15.15 CET
Please let ESMResearch@esm.europa.eu know if you will attend virtually or in person by noon Monday 13 November. 
  • If you attend virtually, please send an email to ESMResearch@esm.europa.eu  so to receive Teams link
  • If you attend in person, please send an email confirmation to ESMResearch@esm.europa.eu   
 The event will take place in Conference area, make sure to come 15 minutes before the event allowing for a timely start!

Paper (pdf)Paper (pdf)

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