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Interactions of monetary and macroprudential policies in a model of the Korean economy

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  • Interactions of monetary and macroprudential policies in a model of the Korean economy
  • Afanasyeva, Elena; Karasulu, Meral
  • German Economic Association


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Title Interactions of monetary and macroprudential policies in a model of the Korean economy
Similar Titles
Material Type Reports
Author(English)

Afanasyeva, Elena; Karasulu, Meral

Publisher

[Frankfurt]:German Economic Association

Date 2013-02
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Administration
Holding German Economic Association

Abstract

We use a microfounded dynamic stochastic general equilibrium (DSGE) model with banks to study interactions between monetary and macroprudential policies in a small open economy. The model is calibrated/estimated for Korea. Cooperation of monetary and macroprudential policies is optimal under a financial shock. Prolonged periods of monetary accommodation lead to inflationary pressures, lower the effectiveness of macroprudential instrument (loan-to-value ratio) and contribute to further credit growth, increasing vulnerabilities.

User Note

Beiträge zur Jahrestagung des Vereins für Socialpolitik 2013: Wettbewerbspolitik und Regulierung in einer globalen Wirtschaftsordnung - Session: Financial Stability, No. G02-V2