Coordinating Monetary and Financial Regulatory Policies

54 Pages Posted: 6 Nov 2017 Last revised: 31 Jan 2018

See all articles by Alejandro Van der Ghote

Alejandro Van der Ghote

European Central Bank (ECB) - Directorate General Research

Multiple version iconThere are 2 versions of this paper

Date Written: December 1, 2017

Abstract

How to conduct macro-prudential regulation? How to coordinate monetary policy and macro-prudential policy? To address these questions, I develop a continuous-time New Keynesian economy in which a financial intermediary sector is subject to a leverage constraint. Coordination between monetary and macro-prudential policies helps to reduce the risk of entering into a …financial crisis and speeds up exit from the crisis. The downside of coordination is variability in inflation and in the employment gap.

Keywords: Monetary policy, Macro-prudential policy, Policy coordination, Financial frictions, Nominal Rigidities

JEL Classification: E31, E32, E44, E52, E61, G01

Suggested Citation

Van der Ghote, Alejandro, Coordinating Monetary and Financial Regulatory Policies (December 1, 2017). Available at SSRN: https://ssrn.com/abstract=3065352 or http://dx.doi.org/10.2139/ssrn.3065352

Alejandro Van der Ghote (Contact Author)

European Central Bank (ECB) - Directorate General Research ( email )

Sonnemannstrasse 20
Frankfurt am Main, Hesse D-60314
Germany

HOME PAGE: http://https://sites.google.com/view/avanderghote/home

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