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Complementaries and Tensions between Monetary and Macroprudential Policies in an Estimated DSGE Model (Application to Slovenia)

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  • Lenarčič, Črt

Abstract

Recent financial crisis has shown that the prior belief that the active monetary policy in pursuing price stability may not be sufficient enough to maintain financial stability as well as macroeconomic stability in an economy. Introducing a new economic policy, the macroprudential policy gave space to a complete new sphere of a�ecting an economy through a policy maker's perspective. Constructing a dynamic stochastic general equilibrium model, which incorporates a banking sector block, enables us to study the effects of financial frictions on the real economy. Taking the case of Slovenia, the simulation results show that taking into account the interplay between the monetary and macroprudential policies in a form of financial shocks matter in the economy.

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  • Lenarčič, Črt, 2019. "Complementaries and Tensions between Monetary and Macroprudential Policies in an Estimated DSGE Model (Application to Slovenia)," MPRA Paper 104486, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:104486
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    Cited by:

    1. Lenarčič, Črt, 2021. "Estimating business and financial cycles in Slovenia," MPRA Paper 109977, University Library of Munich, Germany.

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    More about this item

    Keywords

    monetary policy; macroprudential policy; DSGE model; banking sector;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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