Trade-offs between macroeconomic and financial stability objectives
| Autor: | Armand Fouejieu, Patrick Villieu, Alexandra Popescu |
|---|---|
| Přispěvatelé: | International Monetary Fund (IMF), Washington, District of Columbia (United States), Centre de Recherche sur l'Intégration Economique et Financière (CRIEF), Université de Poitiers, Laboratoire d'Économie d'Orleans [FRE2014] (LEO), Université d'Orléans (UO)-Université de Tours (UT)-Centre National de la Recherche Scientifique (CNRS), Laboratoire d'economie d'orleans (LEO), University of Orléans, Laboratoire d'Économie d'Orleans (LEO), Université d'Orléans (UO)-Université de Tours-Centre National de la Recherche Scientifique (CNRS) |
| Jazyk: | angličtina |
| Rok vydání: | 2019 |
| Předmět: |
Inflation
Trade-offs Economics and Econometrics 050208 finance Financial stability media_common.quotation_subject Financial risk 05 social sciences Monetary policy Monetary economics Interest rate [SHS]Humanities and Social Sciences 0502 economics and business 8. Economic growth Financial crisis New Keynesian economics Economics 050207 economics Monetary policy objectives Economic bubble media_common |
| Zdroj: | Economic Modelling Economic Modelling, Elsevier, 2019, 81, pp.621-639. ⟨10.1016/j.econmod.2019.02.006⟩ |
| ISSN: | 0264-9993 |
| DOI: | 10.1016/j.econmod.2019.02.006⟩ |
| Popis: | International audience; Ten years after the 2008-09 global financial crisis, most advanced economies have recovered and global economic growth has taken hold. However, partly due to accommodative financial conditions, financial risks are on the rise while inflation remains subdued. This revives the debate on the role of monetary policy in containing financial risks. This paper provides a framework to investigate trade-offs between macroeconomic and financial stability when the central bank has a financial stability objective. Relying on a New Keynesian model with an endogenous financial bubble, our simulations suggest that a central bank attempting to “lean against the wind” may face trade-offs between inflation/output stability and financial stability. We therefore argue that the interest rate should be used for achieving traditional macroeconomic goals, and a second, macroprudential instrument should complement the policy rate to tackle financial risk accumulation. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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