Furlanetto, Francesco
[Verfasser:in]
;
Gelain, Paolo
[Sonstige Person, Familie und Körperschaft];
Taheri Sanjani, Marzie
[Sonstige Person, Familie und Körperschaft]
Output Gap in Presence of Financial Frictions and Monetary Policy Trade-Offs
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 2014 erstellt
Beschreibung:
The recent global financial crisis illustrates that financial frictions are a significant source of volatility in the economy. This paper investigates monetary policy stabilization in an environment where financial frictions are a relevant source of macroeconomic fluctuation. We derive a measure of output gap that accounts for frictions in financial market. Furthermore we illustrate that, in the presence of financial frictions, a benevolent central bank faces a substantial trade-off between nominal and real stabilization; optimal monetary policy significantly reduces fluctuations in price and wage inflations but fails to alleviate the output gap volatility. This suggests a role for macroprudential policies