Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Interactions and Coordination between Monetary and Macroprudential Policies†

Interactions and Coordination between Monetary and Macroprudential Policies† AbstractI study monetary and macroprudential policy intervention in a general equilibrium economy with recurrent boom-bust cycles. 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, Recurrence causes noncoordinated policy interventions, but improvement is moderate. (JEL E32, E44, E52, E61) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Macroeconomics American Economic Association

Interactions and Coordination between Monetary and Macroprudential Policies†

Interactions and Coordination between Monetary and Macroprudential Policies†

American Economic Journal: Macroeconomics , Volume 13 (1) – Jan 1, 2021

Abstract

AbstractI study monetary and macroprudential policy intervention in a general equilibrium economy with recurrent boom-bust cycles. 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, Recurrence causes noncoordinated policy interventions, but improvement is moderate. (JEL E32, E44, E52, E61)

Loading next page...
 
/lp/american-economic-association/interactions-and-coordination-between-monetary-and-macroprudential-bGUqvxq0ke
Publisher
American Economic Association
Copyright
Copyright © 2021 © American Economic Association
ISSN
1945-7715
DOI
10.1257/mac.20190139
Publisher site
See Article on Publisher Site

Abstract

AbstractI study monetary and macroprudential policy intervention in a general equilibrium economy with recurrent boom-bust cycles. 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, Recurrence causes noncoordinated policy interventions, but improvement is moderate. (JEL E32, E44, E52, E61)

Journal

American Economic Journal: MacroeconomicsAmerican Economic Association

Published: Jan 1, 2021

There are no references for this article.