Publication: Loan production and monetary policy
Date
Authors
Director
Publisher
Abstract
The authors examine optimal monetary policy in a New Keynesian model with unemployment and financial frictions where banks produce loans using equity as collateral. Firms and households demand loans to finance externally a fraction of their flows of expenditures. Our findings show amplifying business-cycle effects of a more rigid loan production technology. In the monetary policy analysis, the optimal rule clearly outperforms a Taylor-type rule. The optimized interest-rate response to the external finance premium turns significantly negative when either banking rigidities are high or when financial shocks are the only source of business cycle fluctuations.
Description
Keywords
Department
Faculty/School
Degree
Doctorate program
item.page.cita
item.page.rights
© Cambridge University Press 2017
Los documentos de Academica-e están protegidos por derechos de autor con todos los derechos reservados, a no ser que se indique lo contrario.