This paper addresses two main questions. First, it examines the implications of financial frictions, embedded in a New Keynesian DSGE model with a banking sector, for the conduct of welfare-optimal monetary policy. Assuming only one monetary instrument, we analyse how financial frictions affect the gains from commitment and how different are the optimized simple rules with and without financial...

FREQUENTLY CITED THEORETICAL framework for the conduct of monetary policy consists of a policy instrument, an intermediate policy target and a long-run policy objective. The policy instrument is a lever which the central bank can manipulate to achieve its intermediate target. Possible choices for the policy instrument include the quantity of bank reserves, the monetary base (hank reserves plus ...

We study interactions between monetary policy, which sets nominal interest rates, and …scal policy, which levies distortionary income taxes to …nance public goods, in a standard, stickyprice economy with monopolistic competition. Policymakers’inability to commit in advance to future policies gives rise to excessive in‡ation and excessive public spending, resulting in welfare losses equivalent t...

Fujimoto et al. (2014) set up a model with financial frictions through search and matching between firms and banks in the loan market. They also show that optimal policy criteria in the model include terms of credit variables. In this paper, we calibrate the model of Fujimoto et al. (2014) for South Korea and investigate the simple and optimal monetary and macroprudential policy rules that incl...

This paper investigates optimal monetary policy rules when two large countries simultaneously face non-negativity constraints on nominal interest rates. Under policy coordination, domestic optimal monetary policy rules depend on domestic endogenous variables, foreign inflation, and domestic and foreign policy rates when the zero lower bound is never binding. Such policy rules generally lose the...

entrepreneurship, as one of the factors affecting economic growth, is also considered among the key factors by economic policymakers. however, in examining the issue of entrepreneurship, it should be noted that women’s and men’s entrepreneurship can be considered as two distinct and separate phenomena. therefore, the main objective of this paper is to investigate the relationship between women&...

a r t i c l e i n f o Keywords: Loss aversion Downward housing price rigidity Monetary policy Threshold error correction model Asymmetric adjustment Previous studies have discovered the defensive characteristics of housing prices, which is also known as downward price rigidity. This paper discusses whether this feature would result in an asymmetric relationship between housing prices and moneta...

This paper employs a structural vector autoregression (SVAR) model to investigate the monetary policy framework of a small emerging open economy Malaysia, especially how the economy dynamically respond to money, interest rate, exchange rate and foreign shocks. We establish identification conditions to uncover the dynamic effects of monetary policy shocks on various domestic variables. Following...