Credit spread and monetary policy

Yuki Teranishi

Economics Letters, 2012, vol. 114, issue 1, 26-28

Abstract: We show that the spread-adjusted Taylor rule including a response to the credit spread is a theoretically optimal monetary policy under heterogeneous loan contracts. However, the optimal response to the credit spread is ambiguous, given the financial market structure.

Keywords: Credit spread; Optimal monetary policy; Heterogeneous loan contracts (search for similar items in EconPapers)
JEL-codes: E44 E52 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (7)

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Working Paper: Credit Spread and Monetary Policy (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:114:y:2012:i:1:p:26-28

DOI: 10.1016/j.econlet.2011.08.022

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