Taylor Rule Under Financial Instability
| Autor: | Sofia Bauducco, Ales Bulir, Martin Cihak |
|---|---|
| Rok vydání: | 2008 |
| Předmět: |
Inflation
media_common.quotation_subject Monetary policy Monetary economics Credit risk Financial stability monetary policy rule financial instability DSGE models central bank financial sector Instability Taylor rule Output gap New Keynesian economics Dynamic stochastic general equilibrium Economics General Earth and Planetary Sciences General Environmental Science media_common |
| Zdroj: | IMF Working Papers. :1 |
| ISSN: | 1018-5941 |
| DOI: | 10.5089/9781451868807.001 |
| Popis: | This paper contributes to the analysis of monetary policy in the face of financial instability. In particular, we extend the standard new Keynesian dynamic stochastic general equilibrium (DSGE) model with sticky prices to include a financial system. Our simulations suggest that if financial instability affects output and inflation with a lag and if the central bank has privileged information about credit risk, monetary policy that responds instantly to increased credit risk can trade off more output and inflation instability today for a faster return to the trend than a policy that follows the simple Taylor rule with only the contemporaneous output gap and inflation. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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