Macroprudential and Monetary Policy Interactions in a DSGE Model for Sweden

Released on by Mr.Jiaqian Chen
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  • Macroprudential and Monetary Policy Interactions in a DSGE Model for Sweden Book Detail

  • Author : Mr.Jiaqian Chen
  • Release Date : 2016-03-23
  • Publisher : International Monetary Fund
  • Genre : Business & Economics
  • Pages : 58
  • ISBN 13 : 1475546548
  • File Size : 9,9 MB
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Macroprudential and Monetary Policy Interactions in a DSGE Model for Sweden by Mr.Jiaqian Chen PDF Summary

Book Description: We analyse the effects of macroprudential and monetary policies and their interactions using an estimated dynamic stochastic general equilibrium (DSGE) model tailored to Sweden. Households face a ceiling on their loan-to-value ratio and must amortize their mortgages. The government grants mortgage interest payment deductions. Lending rates are affected by mortgage risk weights. We find that demand-side macroprudential measures are more effective in curbing household debt ratios than monetary policy, and they are less costly in terms of foregone consumption. A tighter macroprudential stance is also found to be welfare improving, by promoting lower consumption volatility in response to shocks, especially when using a combination of macroprudential instruments.

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