Countercyclical macro prudential policies in a supporting role to monetary policy /

Countercyclical macro prudential policies in a supporting role to monetary policy /

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Bibliographic Details
Author / Creator:	N'Diaye, Papa M'B. P. (Papa M'Bagnick Paté), author.
Imprint:	[Washington, D.C.] : International Monetary Fund, ©2009.
Description:	1 online resource (22 pages) : illustrations (some color)
Language:	English
Series:	IMF working paper ; WP/09/257 IMF working paper ; WP/09/257.
Subject:	Monetary policy. Fiscal policy. Fiscal policy. Monetary policy.
Format:	E-Resource Book
URL for this record:	http://pi.lib.uchicago.edu/1001/cat/bib/12498356

Hidden Bibliographic Details
Other authors / contributors:	International Monetary Fund. Asia and Pacific Department.
ISBN:	1451918186 9781451918182
Digital file characteristics:	data file
Notes:	Includes bibliographical references (page 22). Print version record.
Summary:	This paper explores how prudential regulations can support monetary policy in reducing output fluctuations while maintaining financial stability. It uses a new framework that blends a standard model for monetary policy analysis with a contingent claims model of financial sector vulnerabilities. The results suggest that binding countercyclical prudential regulations can help reduce output fluctuations and lessen the risk of financial instability. More specifically, countercyclical rules such as countercyclical capital adequacy rules, can allow monetary authorities to achieve the same output and inflation objectives but with smaller adjustments in interest rates. The countercyclical rules can help stem swings in asset prices, lean against a financial accelerator process, and thereby help to lower risks of macroeconomic and financial instability. In economies with fixed exchange rates, where countercyclical monetary policy is not possible, prudential regulations can provide a useful mechanism for mitigating a run-up in asset prices and for promoting output stability.
Other form:	Print version: Ndiaye, Papa. Countercyclical macro prudential policies in a supporting role to monetary policy. [Washington, DC] : International Monetary Fund (IMF), ©2009
Standard no.:	10.5089/9781451918182.001

Description
Summary:	This paper explores how prudential regulations can support monetary policy in reducing output fluctuations while maintaining financial stability. It uses a new framework that blends a standard model for monetary policy analysis with a contingent claims model of financial sector vulnerabilities. The results suggest that binding countercyclical prudential regulations can help reduce output fluctuations and lessen the risk of financial instability. More specifically, countercyclical rules such as countercyclical capital adequacy rules, can allow monetary authorities to achieve the same output and inflation objectives but with smaller adjustments in interest rates. The countercyclical rules can help stem swings in asset prices, lean against a financial accelerator process, and thereby help to lower risks of macroeconomic and financial instability. In economies with fixed exchange rates, where countercyclical monetary policy is not possible, prudential regulations can provide a useful mechanism for mitigating a run-up in asset prices and for promoting output stability.
Physical Description:	1 online resource (22 pages) : illustrations (some color)
Bibliography:	Includes bibliographical references (page 22).
ISBN:	1451918186 9781451918182