Philadelphia paper praises macro-prudential potential


Macro-prudential policy controls credit more efficiently than monetary policy, according to a working paper published by the Federal Reserve Bank of Philadelphia on November 9.

The author, Hyunduk Suh, examines the interaction between macroprudential and monetary policy with a New Keynesian dynamic stochastic general equilibrium model with financial frictions.

Counter-cyclical macro-prudential policy can stabilise credit cycles, as it facilitates greater lending and capital accumulation by

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