Will macroprudential policy counteract monetary policy’s effects on financial stability?
Itai Agur () and
Working Papers from Bruegel
How does monetary policy impact upon macroprudential regulation? This paper models monetary policy’s transmission to bank risk taking, and its interaction with a regulator’s optimization problem. The regulator uses its macroprudential tool, a leverage ratio, to maintain financial stability, while taking account of the impact on credit provision. A change in the monetary policy rate tilts the regulator’s entire trade-off. The authors show that the regulator allows interest rate changes...
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Journal Article: Will macroprudential policy counteract monetary policy’s effects on financial stability? (2019)
Working Paper: Will Macroprudential Policy Counteract Monetary Policy’s Effects on Financial Stability? (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:bre:wpaper:23907
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