Systemic Risk : A New Trade-off for Monetary Policy?

A New Trade-off for Monetary Policy?

Systemic Risk : A New Trade-off for Monetary Policy?
We introduce time-varying systemic risk in an otherwise standard New-Keynesianmodel to study whether a simple leaning-against-the-wind policy can reduce systemic riskand improve welfare. We find that an unexpected increase in policy rates reduces output,inflation, and asset prices without fundamentally mitigating financial risks. We also find... READ MORE...

Publication date: June 2015
ISBN 9781513579245
$18.00

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