Monetary Policy and the Financial Sector

Aarti Singh, Sophie Stone and Jacek Suda

No 2015-04, Working Papers from University of Sydney, School of Economics

Abstract: In this paper we study whether central banks should react to financial sector variables in their policy rules. We find that responding to asset prices has no impact and does not increase the likelihood of equilibrium indeterminacy. However, a response to entrepreneurial net worth increases the likelihood of determinacy in current and forward-looking policy rules.

Keywords: Monetary policy; determinacy; financial sector; asset prices (search for similar items in EconPapers)
Date: 2015-02
New Economics Papers: this item is included in nep-cba and nep-mon
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Citations: View citations in EconPapers (2)

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