Monetary and Macroprudential Policy Games in a Monetary

Richard Dennis and Pelin Ilbas ()
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Pelin Ilbas: National Bank of Belgium

No 304, Working Paper Research from National Bank of Belgium

Abstract: We use the two-country model of the euro area developed by Quint and Rabanal (2014)to study policymaking in the European Monetary Union (EMU). In particular, we focus on strategic interactions: 1) between monetary policy and a common macroprudential authority, and; 2) between an EMU-level monetary authority and regional macroprudential authorities. In the .rst case, price stability and .nancial stability are pursued at the EMU level, while in the second case each macroprudential authority adopts region-speci.c objectives. We compare cooperative equilibria in the simultaneous-move and leadership solutions, each obtained assuming policy iscretion. Further, we assess the e¤ects on policy performance of assigning shared objectives across policymakers and of altering the level of importance attached to various policy objectives.

Keywords: Monetary policy; macroprudential policy; policy coordination (search for similar items in EconPapers)
JEL-codes: E42 E44 E52 E58 E61 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2016-10
New Economics Papers: this item is included in nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:201610-304

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