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Financial Shocks and Optimal Monetary Policy Rules

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dc.description.abstract In this paper we assess the performance of optimal monetary policy rules including alternative financial variables, regarding their ability to stabilize the macro-economy following financial shocks. We use a model that comprises both a traditional and a shadow banking sector, which proved to be useful in understanding financial boom-bust episodes and allows for a wide spectrum of financial shocks and transmission mechanisms. Overall, we find that targeting financial stability – in particular credit growth – improves the stabilization of an economy facing financial shocks. The results do not depend qualitatively on the persistence of financial shocks, but the effectiveness of a policy rule targeting financial stability increases significantly when those shocks are persistent. en
dc.title Financial Shocks and Optimal Monetary Policy Rules en
dc.contributor.author Verona, Fabio
dc.contributor.author Drumond, Inês
dc.contributor.author Martins, Manuel M. F.
dc.date.accessioned 2018-02-26T17:24:43Z
dc.date.available 2018-02-26T17:24:43Z
dc.date.issued 2018-02-26
dc.identifier.uri http://lacer.lacea.org/handle/123456789/64806
lacea.language.supported en
dc.description Working paper
dc.language.iso en
dc.subject Financial Shocks
dc.subject Optimal Monetary Policy
dc.subject Taylor Rules
dc.subject DSGE
dc.type Working Paper


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