December 2020

Monetary Coverage and Monetary Stability

Isabel Cairó and Jae Sim

Abstract:

The 2008 Global Monetary Disaster known as into search data from the narrow focal point on tag balance of inflation focusing on regimes. This paper analysis the connection between tag balance and financial balance by examining different monetary policy regimes for an economy that experiences endogenous financial crises due to excessive household sector leverage. We attain four conclusions. First, a central bank can toughen each tag balance and financial balance by adopting an aggressive inflation focusing on regime, sms lån på minuttetin the absence of the zero decrease plug (ZLB) constraint on nominal passion rates. Second, sms lån på minuttetin the presence of the ZLB constraint, an aggressive inflation focusing on regime would possibly per chance per chance well merely undermine each tag balance and financial balance. Third, an aggressive tag-level focusing on regime can toughen each tag balance and financial balance, despite the presence of the ZLB constraint. Finally, a leaning in opposition to the wind policy is probably detrimental to each tag balance and financial balance when the credit cycle is pushed by countercyclical household sector leverage. On this atmosphere, leaning sms lån på minuttet credit spreads is probably more ultimate.

Keywords: Inflation focusing on, financial crises, zero decrease plug

DOI: https://doi.org/10.17016/FEDS.2020.101

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Final Replace:
December 18, 2020

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