Optimal Macroprudential and Fiscal Policy in a Monetary Union
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Malmierca, María, Optimal Macroprudential and Fiscal Policy in a Monetary Union (November 17, 2020). Available at SSRN: https://ssrn.com/abstract=3732388 or http://dx.doi.org/10.2139/ssrn.3732388
The growing concern about the financial system stability has turned macroprudential policy into a key instrument of the policy mix. Through a two-country model for a monetary union, I evaluate the optimal combinations of macroprudential and fiscal policy, both in terms of welfare maximization and loss function minimization (stability). I find that the advisability to coordinate macroprudential and fiscal policy depends on the kind of shock that drives the business cycle fluctuations. In the even ...