Macroprudential Policies and Financial Stability

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F49777513%3A23520%2F11%3A43898961" target="_blank" >RIV/49777513:23520/11:43898961 - isvavai.cz</a>
Result on the web
<a href="http://dx.doi.org/10.1111/j.1475-4932.2010.00692.x" target="_blank" >http://dx.doi.org/10.1111/j.1475-4932.2010.00692.x</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1111/j.1475-4932.2010.00692.x" target="_blank" >10.1111/j.1475-4932.2010.00692.x</a>

Result language
angličtina
Original language name
Macroprudential Policies and Financial Stability
Original language description
This article attempts to assess to what extent the central bank or the government should respond to developments that can cause financial instability, such as housing or asset bubbles, overextended budgetary policies or excessive public and household debt. To analyse this question, we set up a simple reduced-form model in which monetary and fiscal policy interact, and imbalances (bubbles) can occur in the medium-run. Considering several scenarios with both benevolent and idiosyncratic policy-makers, theanalysis shows that the answer depends on a number of characteristics of the economy, as well as on the monetary and fiscal policy preferences with respect to inflation and output stabilisation. We show that socially optimal financial instability prevention should be carried out by: (i) both monetary and fiscal policy (sharing region) under some circumstances; and (ii) fiscal policy only (specialisation region) under others. There is, however, a moral hazard problem: both policy-makers
Czech name
—
Czech description
—

Type
J<sub>x</sub> - Unclassified - Peer-reviewed scientific article (Jimp, Jsc and Jost)
CEP classification
AH - Economics
OECD FORD branch
—

Publication year
2011
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Similar results(10)