LEANING AGAINST WINDY BANK LENDING
Giovanni Melina () and
Stefania Villa ()
Economic Inquiry, 2018, vol. 56, issue 1, 460-482
Using an estimated dynamic stochastic general equilibrium model with banking, this paper first provides evidence that monetary policy reacted to bank loan growth in the United States during the Great Moderation. It then shows that the optimized simple interest‐rate rule features no response to the growth of bank credit. However, the welfare loss associated to the empirical responsiveness is small. The sources of business cycle fluctuations are crucial in determining whether a “leaning‐against‐the‐wind” policy is optimal or not. In fact, the predominant role of supply shocks in the model gives rise to a trade‐off between inflation and financial stabilization. (JEL E32, E44, E52)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Working Paper: Leaning Against Windy Bank Lending (2017)
Working Paper: Leaning Against Windy Bank Lending (2015)
Working Paper: Leaning Against Windy Bank Lending (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:ecinqu:v:56:y:2018:i:1:p:460-482
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0095-2583
Access Statistics for this article
Economic Inquiry is currently edited by Preston McAfee
More articles in Economic Inquiry from Western Economic Association International Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().