Monetary and Macroprudential Policy Rules in a Model with House Price Booms

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Price:  $18.00

Author/Editor: Alasdair Scott, Pau Rabanal, Prakash Kannan
Release Date: © November, 2009
ISBN : 978-1-45187-398-6
Stock #: WPIEA2009251
English
Stock Status: On back-order

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Description

We argue that a stronger emphasis on macrofinancial risk could provide stabilization benefits. Simulations results suggest that strong monetary reactions to accelerator mechanisms that push up credit growth and asset prices could help macroeconomic stability. In addition, using a macroprudential instrument designed specifically to dampen credit market cycles would also be useful. But invariant and rigid policy responses raise the risk of policy errors that could lower, not raise, macroeconomic stability. Hence, discretion would be required.

Taxonomy

Asset prices , Banks and banking , Capital markets , Central banks , Economic policy , Financial institutions and markets , Monetary policy




More publications in this series: Working Papers


More publications by: Alasdair Scott ; Pau Rabanal ; Prakash Kannan