Monetary and Macroprudential Policy in an Estimated DSGE Model of the Euro Area

@inproceedings{Quint2013MonetaryAM,
  title={Monetary and Macroprudential Policy in an Estimated DSGE Model of the Euro Area},
  author={Dominic Quint and Pau Rabanal},
  year={2013}
}
In this paper, we study the optimal mix of monetary and macroprudential policies in an estimated two-country model of the euro area. The model includes real, nominal and financial frictions, and hence both monetary and macroprudential policy can play a role. We find that the introduction of a macroprudential rule would help in reducing macroeconomic volatility, improve welfare, and partially substitute for the lack of national monetary policies. Macroprudential policy would always increase the… CONTINUE READING

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