Interactions and coordination between monetary and macroprudential policies
By: Ghote, Alejandro Van Der
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Material type: 
BookPublisher: American Economic Journal: Macroeconomics Description: 13(1), Jan, 2021: p.1-34.
In:
American Economic Journal: MacroeconomicsSummary: I study monetary and macroprudential policy intervention in a general equilibrium economy with recurrent boom-bust cycles. Recurrence causes forward-looking variables to also react to policy intervention during phases in which the intervention is inactive. Macroprudential policies that contain systemic risk in financial markets during booms, therefore, relax market-based funding constraints during busts, which helps mitigate the severity and shorten the duration of economic meltdowns. Contractionary monetary interventions during booms also have (latent) beneficial effects during busts. Coordination between the two policy instruments improves social welfare over standard, noncoordinated policy interventions, but improvement is moderate. – Reproduced
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 13(1), Jan, 2021: p.1-34 | Available | AR124739 |
I study monetary and macroprudential policy intervention in a general equilibrium economy with recurrent boom-bust cycles. Recurrence causes forward-looking variables to also react to policy intervention during phases in which the intervention is inactive. Macroprudential policies that contain systemic risk in financial markets during booms, therefore, relax market-based funding constraints during busts, which helps mitigate the severity and shorten the duration of economic meltdowns. Contractionary monetary interventions during booms also have (latent) beneficial effects during busts. Coordination between the two policy instruments improves social welfare over standard, noncoordinated policy interventions, but improvement is moderate. – Reproduced
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