Lambertini, Luisa
[Verfasser:in]
;
Mendicino, Caterina
[Sonstige Person, Familie und Körperschaft];
Punzi, Maria Teresa
[Sonstige Person, Familie und Körperschaft]
Leaning Against Boom-Bust Cycles in Credit and Housing Prices
Erschienen in:Center for Fiscal Policy, EPFL, Chair of International Finance (CFI) Working Paper ; No. 2011-01
Umfang:
1 Online-Ressource (30 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.1789573
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 18, 2011 erstellt
Beschreibung:
This paper studies the potential gains of monetary and macro-prudential policies that lean against news-driven boom-bust cycles in housing prices and credit generated by expectations of future macroeconomic developments. First, we find no trade-off between the traditional goals of monetary policy and leaning against boom-bust cycles. An interest-rate rule that completely stabilizes inflation is not optimal. In contrast, an interest-rate rule that responds to financial variables mitigates macroeconomic and financial cycles and is welfare improving relative to the estimated rule. Second, counter-cyclical Loan-to-Value rules that respond to credit growth do not increase inflation volatility and are more effective in maintaining a stable provision of financial intermediation than interest-rate rules that respond to financial variables. Heterogeneity in the welfare implications for borrowers and savers make it difficult to rank the two policy frameworks