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Chicago Fed Letter, No. 325, August 2014
Is There a Trade-Off Between Low Bond Risk Premiums and Financial Stability?

It has been suggested that financial instability may be more likely following periods of low bond market risk premiums. The timing of past episodes of instability casts doubt upon the hypothesis that low levels of risk premiums sow the seeds of future instability.



Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604-1413, USA. Tel. (312) 322-5322

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