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Financial Frictions and Macroprudential Policy

  • Michal Brzoza-Brzezina

    (Narodowy Bank Polski and Warsaw School of Economics)

Incorporating financial intermediaries, with their ability to generate shocks and frictions, into macroeconomic models has recently gained substantial attention of the profession. In this commentary I ask whether the models we generated are ripe to provide valuable, quantitative advice to policymakers, especially those interested in implementing and conducting macroprudential policy. I concentrate on three features of standard DSGE models that, in my view, still make them hard to digest for policymakers: goals of macroprudential policy, assumed terms of lending, and spillovers.

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Article provided by International Journal of Central Banking in its journal International Journal of Central Banking.

Volume (Year): 10 (2014)
Issue (Month): 2 (June)
Pages: 249-261

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Handle: RePEc:ijc:ijcjou:y:2014:q:2:a:10
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  1. Kollmann, Robert, 2012. "Global Banks, Financial Shocks and International Business Cycles: Evidence from an Estimated Model," CEPR Discussion Papers 8985, C.E.P.R. Discussion Papers.
  2. Claudio Borio, 2012. "The financial cycle and macroeconomics: What have we learnt?," BIS Working Papers 395, Bank for International Settlements.
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  6. Finn E. Kydland & Peter Rupert & Roman Sustek, 2012. "Housing Dynamics over the Business Cycle," NBER Working Papers 18432, National Bureau of Economic Research, Inc.
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  8. Kolasa, Marcin & Lombardo, Giovanni, 2011. "Financial frictions and optimal monetary policy in an open economy," Working Paper Series 1338, European Central Bank.
  9. Michał Brzoza-Brzezina & Marcin Kolasa & Krzysztof Makarski, 2014. "Monetary and macroprudential policy with foreign currency loans," National Bank of Poland Working Papers 184, National Bank of Poland, Economic Institute.
  10. Alessandro Calza & Tommaso Monacelli & Livio Stracca, 2013. "Housing Finance And Monetary Policy," Journal of the European Economic Association, European Economic Association, vol. 11, pages 101-122, 01.
  11. Paolo Gelain & Marcin Kolasa & Michał Brzoza-Brzezina, 2014. "Monetary and macroprudential policy with multi-period loans," 2014 Meeting Papers 575, Society for Economic Dynamics.
  12. Marco A. Espinosa-Vega & Juan Solé, 2011. "Cross-border financial surveillance: a network perspective," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 3(3), pages 182-205, August.
  13. Angeloni, Ignazio & Faia, Ester, 2013. "Capital regulation and monetary policy with fragile banks," Journal of Monetary Economics, Elsevier, vol. 60(3), pages 311-324.
  14. Roman Sustek & Peter Rupert & Finn Kydland, 2012. "Housing Dynamics," 2012 Meeting Papers 315, Society for Economic Dynamics.
  15. Memmel, Christoph & Sachs, Angelika, 2011. "Contagion in the interbank market and its determinants," Discussion Paper Series 2: Banking and Financial Studies 2011,17, Deutsche Bundesbank, Research Centre.
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