Monetary policy can promote financial stability and improve household welfare. We consider a macro model with sector in which banks do not actively issue equity, output growth depend on the aggregate level of bank equilibrium is inefficient. rules responding to are ex-ante stabilizing because their effects risk premia decrease likelihood crises boost leverage during downturns. Stability gains f...

Most major types of debt have grown rapidly in recent years. The most publicized aspect of the overall growth in debt has been the unprecedented size of federal government budget deficits. But debt of households and businesses has also grown rapidly, and the debt of developing countries has risen so much that exceptional efforts by international lending agencies, creditors in developed countrie...

Many emerging market economies have used macroprudential policy to mitigate the risk of financial crises and the resulting output losses. However, macroprudential policy may reduce economic growth in good times. This paper introduces endogenous growth into a small open economy model with occasionally binding collateral constraints in order to study the impact of macroprudential policy on financ...