Template-Type: ReDIF-Paper 1.0
Author-Name: Ivan Khotulev
Author-Email: KhotulevIM@cbr.ru
Author-Workplace-Name: Bank of Russia, Russian Federation

Author-Name: Konstantin Styrin
Author-Email: StyrinKA@cbr.ru
Author-Workplace-Name: Bank of Russia, Russian Federation




Title: Optimal monetary and macroprudential policies for financial stability in a commodity-exporting economy

Abstract: We develop a model to analyze the optimal combination of macroprudential and monetary
policies in a small open commodity-exporting economy. Unlike a closed economy, where
monetary and macroprudential policies tend to be substitutes, in a small open economy the
optimal policy mix depends on the specifics of shocks and economic structure. Monetary and
macroprudential policies tend to be complements when the degree of pass-through of credit
spreads into marginal costs and prices is sufficiently high, or when a credit boom is caused
by a commodity boom, a fraction of consumers lacks access to financial markets, and the
government follows a fiscal policy rule. The two policies are substitutes when the complementarity
between domestic and imported production inputs is sufficiently high.

Length: 69 pages
Creation-Date: 2019-11
Revision-Date:
Publication-Status:
File-URL: http://www.cbr.ru/Content/Document/File/87579/wp-52_e.pdf
File-Format: Application/pdf
File-Function:
Number:wps52
Classification-JEL: E52, E58, G01, G28.
Keywords: Monetary policy, macroprudential policy, financial stability, commodity exporter, small open economy.
Handle:RePEc:bkr:wpaper:wps52