Monetary policy and financial stability: what role for the interest rate?
BADARAU, Cristina
Laboratoire d'analyse et de recherche en économie et finance internationales [Larefi]
Laboratoire d'analyse et de recherche en économie et finance internationales [Larefi]
BADARAU, Cristina
Laboratoire d'analyse et de recherche en économie et finance internationales [Larefi]
< Réduire
Laboratoire d'analyse et de recherche en économie et finance internationales [Larefi]
Langue
EN
Article de revue
Ce document a été publié dans
International Economics and Economic Policy. 2015, vol. 12, p. 359-374
Résumé en anglais
We propose an ex-post analysis of the behavior of a central bank confronted with financial turmoil. For this purpose, we rely on a DSGE model that combines credit market frictions with a boom and bust scenario on the price ...Lire la suite >
We propose an ex-post analysis of the behavior of a central bank confronted with financial turmoil. For this purpose, we rely on a DSGE model that combines credit market frictions with a boom and bust scenario on the price of capital. Within this framework, we seek to understand the extent to which central banks could have intervened to limit the effects of the financial bubble and its bursting. We compare the results obtained in terms of economic stabilization under a simple Taylor rule with those of an augmented rule that takes into account a financial indicator. We show that a central bank using as sole instrument the interest rate cannot simultaneously improve inflation and credit cycles.< Réduire
Mots clés en anglais
Interest Rate
Monetary Policy
Central Bank
Idiosyncratic Risk
Taylor Rule