Loan production and monetary policy
Fecha
2019Versión
Acceso abierto / Sarbide irekia
Tipo
Artículo / Artikulua
Versión
Versión aceptada / Onetsi den bertsioa
Impacto
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10.1017/S1365100516001139
Resumen
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 op ...
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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. [--]
Materias
External finance,
Optimal monetary policy,
Business cycles
Editor
Cambridge University Press
Publicado en
Macroeconomic Dynamics, 23 (1), 101-143
Departamento
Universidad Pública de Navarra. Departamento de Economía /
Nafarroako Unibertsitate Publikoa. Ekonomia Saila
Versión del editor
Entidades Financiadoras
The authors are grateful to Banco de Espana for the grant on the project 'Politica monetaria en economias con fricciones financieras y bancarias.' Luca Deidda gratefully acknowledges financial support from the Italian Ministero dell'Universita, PRIN, Fondazione Banco di Sardegna, and Fundaçao para Ciencia ea Tecnologia, Portugal. Miguel Casares and Jose E. Galdon-Sanchez also acknowledge Spanish Ministerio de Economia for research project ECO2015-64330-P.