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On the use of Monetary and Macroprudential Policies for Small Open Economies

We explore optimal monetary and macroprudential policy rules for a small open economy. Delegating 'lean against the wind' squarely to macroprudential policy provides a more robust policy mix to shock uncertainty—(i) if macroprudential measures exist, there are no significant welfare gains...

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Bibliographic Details
Main Author: Özkan, Gülçin
Other Authors: Unsal, Filiz
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2014
Series:IMF Working Papers
Subjects:
Economic Policy
Wealth
Economics
Credit
Labour
Monetary Economics
Financial Sector Policy And Analysis
Saving
Self-employed
Monetary Policy, Central Banking, And The Supply Of Money And Credit: General
National Accounts
Money
Labor
Self-employment
Consumption
Financial Markets And The Macroeconomy
Labor Demand
Macroeconomics
Macroeconomics: Consumption
Macroprudential Policy
Money And Monetary Policy
Macroprudential Policy Instruments
Income Economics
United Kingdom
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:We explore optimal monetary and macroprudential policy rules for a small open economy. Delegating 'lean against the wind' squarely to macroprudential policy provides a more robust policy mix to shock uncertainty—(i) if macroprudential measures exist, there are no significant welfare gains from monetary policy reacting to credit growth under a financial shock; and (ii) monetary responses to financial markets could generate bigger welfare losses than macroprudential responses under different shocks. The source of outstanding liabilities also plays a role in the choice of policy instrument— macroprudential policies are particularly effective for emerging markets where foreign borrowing is sizeable
Physical Description:34 pages
ISBN:9781498375429

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