Countercyclical prudential policies have ‘important implications' for monetary policy
The use of a countercyclical macro-prudential instrument in addition to manipulating interest rates "improves welfare and has important implications for the conduct of monetary policy", according to an IMF paper published yesterday on the interactions between monetary and macro-prudential policies.
In Monetary and Macro-prudential Policies to Manage Capital Flows, Juan Pablo Medina Guzman and Jorge Roldos study interactions between monetary and macro-prudential policies in a model with nominal
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