Optimal monetary and macroprudential policies for financial stability in a commodity-exporting economy
Ivan Khotulev and
Konstantin Styrin ()
No wps52, Bank of Russia Working Paper Series from Bank of Russia
We develop a model to analyze the optimal combination of macroprudential and monetary policies in a small open commodity-exporting economy. Unlike a closed economy, where monetary and macroprudential policies tend to be substitutes, in a small open economy the optimal policy mix depends on the specifics of shocks and economic structure. Monetary and macroprudential policies tend to be complements when the degree of pass-through of credit spreads into marginal costs and prices is sufficiently high, or when a credit boom is caused by a commodity boom, a fraction of consumers lacks access to financial markets, and the government follows a fiscal policy rule. The two policies are substitutes when the complementarity between domestic and imported production inputs is sufficiently high.
Keywords: Monetary policy; macroprudential policy; financial stability; commodity exporter; small open economy. (search for similar items in EconPapers)
JEL-codes: E52 E58 G01 G28 (search for similar items in EconPapers)
Pages: 69 pages
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac, nep-mon, nep-opm and nep-ore
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Journal Article: Optimal Monetary and Macroprudential Policies for Financial Stability in a Commodity-Exporting Economy (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bkr:wpaper:wps52
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