Stabilization and the Policy Mix in a Monetary Union
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Malmierca, María, Stabilization and the Policy Mix in a Monetary Union (February 20, 2020). Available at SSRN: https://ssrn.com/abstract=3541772
The need for macroprudential policy to “lean against the wind” of credit cycles at the aim of financial and hence macroeconomic stability is a common belief. Which design of macroprudential policy might attain the greatest stability for the economy is still an open debate. This paper builds a two-country DSGE model for a monetary union and analyzes, through different macroprudential scenarios, the response of the main variables to an asymmetric credit risk shock. When national macroprudential po ...