Description

This paper surveys dynamic stochastic general equilibrium models with financial frictions in use by central banks and discusses priorities for future development of such models for the purpose of monetary and financial stability analysis. It highlights the need to develop macrofinancial models which allow analysis of the macroeconomic effects of macroprudential policy tools and to evaluate elements of the Basel III reforms as a priority. The paper also reviews the main approaches to introducing financial frictions into general equilibrium models.

Taxonomy

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

More publications in this series: Working Papers

More publications by: Scott Roger ; Jan Vlcek