NY Fed researchers study how, and how not, to co-ordinate policy
A staff report published by the Federal Reserve Bank of New York seeks to shed new light on the interaction between monetary and macro-prudential policy, and how best to co-ordinate the two.
In Coordinating Monetary and Macroprudential Policies, authors Bianca De Paoli and Matthias Paustian treat macro-prudential policies as a cyclical tax on borrowing, and monetary policy as changes in the short-run interest rate. They then use a New Keynesian model to assess the costs of different policy
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