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ERIC Number: EJ1051443
Record Type: Journal
Publication Date: 2015
Pages: 15
Abstractor: As Provided
Reference Count: 15
ISBN: N/A
ISSN: ISSN-0022-0485
A Primer on Macroprudential Policy
Poutineau, Jean-Christophe; Vermandel, Gauthier
Journal of Economic Education, v46 n1 p68-82 2015
This article introduces macroprudential policy using a static New Keynesian Macroeconomics model with financial frictions. The authors analyze two related questions: First, they show how the procyclicality of financial factors, captured by the financial accelerator, amplifies the transmission of supply and demand shocks and impacts the intuition they get from a basic intermediate macroeconomics. Second, adopting an optimal policy perspective, they show how a policymaker may use macroprudential policy to complete monetary policy measures. Following the "Mundellian Policy Assignment principle," macroprudential policy should be specialized to address the procyclicality problem to suppress welfare losses associated with the building of financial imbalances, thus helping monetary policy to concentrate on the output inflation tradeoff.
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Publication Type: Journal Articles; Reports - Evaluative
Education Level: N/A
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A