Monetary and macroprudential policies under rules and discretion

Lien Laureys; Roland Meeks

doi:10.1016/j.econlet.2018.06.005

Monetary and macroprudential policies under rules and discretion

Lien Laureys, Roland Meeks^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

6 Citations (Scopus)

Abstract

We study the policy design problem faced by central banks with both monetary and macroprudential objectives. We find that a time-consistent policy is preferred to a widely-studied class of simple monetary and macroprudential rules. When interest rates adjust to macroprudential policy in an augmented monetary policy rule, improved outcomes result. When policy authority is split between institutions, strategic interactions between discretionary policymakers can result in notably poor outcomes.

Original language	English
Pages (from-to)	104-108
Number of pages	5
Journal	Economics Letters
Volume	170
DOIs	https://doi.org/10.1016/j.econlet.2018.06.005
Publication status	Published - Sept 2018
Externally published	Yes

Access to Document

10.1016/j.econlet.2018.06.005

Cite this

@article{b21c944ab16d439aa5ed7e22516a14ce,

title = "Monetary and macroprudential policies under rules and discretion",

abstract = "We study the policy design problem faced by central banks with both monetary and macroprudential objectives. We find that a time-consistent policy is preferred to a widely-studied class of simple monetary and macroprudential rules. When interest rates adjust to macroprudential policy in an augmented monetary policy rule, improved outcomes result. When policy authority is split between institutions, strategic interactions between discretionary policymakers can result in notably poor outcomes.",

keywords = "DSGE models, Macroprudential policy, Monetary policy, Nash policy games",

author = "Lien Laureys and Roland Meeks",

note = "Publisher Copyright: {\textcopyright} 2018",

year = "2018",

month = sep,

doi = "10.1016/j.econlet.2018.06.005",

language = "English",

volume = "170",

pages = "104--108",

journal = "Economics Letters",

issn = "0165-1765",

publisher = "Elsevier B.V.",

}

TY - JOUR

T1 - Monetary and macroprudential policies under rules and discretion

AU - Laureys, Lien

AU - Meeks, Roland

PY - 2018/9

Y1 - 2018/9

N2 - We study the policy design problem faced by central banks with both monetary and macroprudential objectives. We find that a time-consistent policy is preferred to a widely-studied class of simple monetary and macroprudential rules. When interest rates adjust to macroprudential policy in an augmented monetary policy rule, improved outcomes result. When policy authority is split between institutions, strategic interactions between discretionary policymakers can result in notably poor outcomes.

AB - We study the policy design problem faced by central banks with both monetary and macroprudential objectives. We find that a time-consistent policy is preferred to a widely-studied class of simple monetary and macroprudential rules. When interest rates adjust to macroprudential policy in an augmented monetary policy rule, improved outcomes result. When policy authority is split between institutions, strategic interactions between discretionary policymakers can result in notably poor outcomes.

KW - DSGE models

KW - Macroprudential policy

KW - Monetary policy

KW - Nash policy games

UR - http://www.scopus.com/inward/record.url?scp=85048573268&partnerID=8YFLogxK

U2 - 10.1016/j.econlet.2018.06.005

DO - 10.1016/j.econlet.2018.06.005

M3 - Article

SN - 0165-1765

VL - 170

SP - 104

EP - 108

JO - Economics Letters

JF - Economics Letters

ER -

Monetary and macroprudential policies under rules and discretion

Abstract

Access to Document

Other files and links

Fingerprint

Cite this