Monetary policy impacts financial stability – BIS paper
“Leaning against” booms may be better goal than strict inflation targeting, say researchers
Monetary policy influences the build-up of financial imbalances, and a policy of “leaning against” booms could boost welfare, research published by the Bank for International Settlements finds.
Authors Frederic Boissay, Fabrice Collard, Jordi Galí and Cristina Manea augment a “textbook” New Keynesian macroeconomic model with mechanisms that generate financial imbalances.
The paper outlines a model featuring “endogenous capital accumulation”, meaning the economy can deviate from its steady
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