The RBA has published a paper titled:...........>

RBA: The RBA has published a paper titled: Cost-benefit Analysis of Leaning

against the Wind

- The paper notes that "setting interest rates higher than macroeconomic

conditions would warrant due to concerns about financial instability is called

'leaning against the wind'. Many recent papers have attempted to quantify and

evaluate the effects of this policy. This paper summarises this research and

applies the approach to Australia. The papers we survey see the benefit of

leaning against the wind as avoiding financial crises, such as those that

affected Australia in 1990 or other countries in 2008. Most of the international

research finds that interest rates have too small an effect on the probability

of a crisis for this benefit to be worth higher unemployment. Using Australian

data, we find similar results. We estimate the costs of leaning against the wind

to be three to eight times larger than the benefit of avoiding financial crises.

However, research has not yet quantified the increased resilience of household

balance sheets, which may be an extra benefit of leaning against the wind."