On the Interplay between Monetary Policy and Macroprudential Policy: A Simple Analytical Framework
23 Pages Posted: 24 Oct 2017
Date Written: October 03, 2017
Abstract
The paper provides a simple analytical framework for analyzing the interplay between monetary policy and macroprudential policy. Three questions are analyzed: (i) Under which assumptions is coordination necessary to implement an optimal policy mix? (ii) Are the two policy instruments substitutes or complements, i.e. should they move in opposite or the same direction as response to a shock? (iii) Can "leaning against the wind" in monetary policy lead to a negative inflation bias?
Keywords: Monetary policy, Macroprudential policy, Coordination
JEL Classification: E52, E58, E61
Suggested Citation: Suggested Citation
Røisland, Øistein, On the Interplay between Monetary Policy and Macroprudential Policy: A Simple Analytical Framework (October 03, 2017). Norges Bank Working Paper 18/2017; ISBN: 978-82-8379-001-6, Available at SSRN: https://ssrn.com/abstract=3057982 or http://dx.doi.org/10.2139/ssrn.3057982
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