2 That is, monetary policy tends to work in part through its effect on capital market risk premiums, perhaps through some sort of risk-taking or reaching-for-yield mechanism. 1  See Feroli and others (2014), p. 6. 2  See, for example, Hanson and Stein (2012); Gertler and Karadi (2013); and Gilchrist, Lopez-Salido, and Zakrajsek (2013).
BIS central bankers’ speeches  1  On the other hand, while this empirical observation sheds some interesting light on how monetary policy influences the real economy, it does not by itself suggest that there is any financial stability dark side to the lowered risk premiums that go with monetary accommodation.