Financial Stability and Interest-Rate Policy: A Quantitative Assessment of Costs and Benefits

Andrea Pescatori and Stefan Laséen ()

No 2016/073, IMF Working Papers from International Monetary Fund

Abstract: Should monetary policy use its short-term policy rate to stabilize the growth in household credit and housing prices with the aim of promoting financial stability? We ask this question for the case of Canada. We find that to a first approximation, the answer is no— especially when the economy is slowing down.

Keywords: WP; financial crisis; interest rate; Monetary Policy; Endogenous Financial Risk; Bayesian VAR; Non-Linear Dynamics; Policy Evaluation; crisis probability; credit growth; monetary policy shock; crisis inflation; credit variable; Credit; Central bank policy rate; Financial sector stability; Inflation; Global (search for similar items in EconPapers)
Pages: 29
Date: 2016-03-21
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Citations: View citations in EconPapers (7)

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Journal Article: Financial stability and interest‐rate policy: A quantitative assessment of costs and benefit (2020)
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