This paper uses the popular Bernanke, Gertler and Gilchrist (BGG) model to explore links between the financial health of the non-financial corporate sector and bank lending behaviour on the one hand, and the effectiveness of monetary policy on the other. We use the model's microeconomic...

The Bank's July 2006 Financial Stability Report (FSR) included a new approach to assessing risks to the stability of the UK financial system. This paper explains the methodology and analysis behind this work and outlines what is being done to improve and extend it. Section 1 of the paper sets...

Economic models often assume that the impact on the wider economy of changes in financial conditions can be summarised by a relatively limited range of financial variables, such as risk-free interest rates and long-term government bond rates. But changes in financial conditions can at times have...