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An analysis of monetary and macroprudential policies in a DSGE model with reserve requirements and mortgage lending

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  • Ben-Gad, Michael
  • Pearlman, Joseph
  • Sabuga, Ivy

Abstract

•Raising the reserve ratio leads to borrowers' welfare gains at the expense of savers.•Macroprudential policy stabilises the economy in response to a risk shock.•Macroprudential policy generates a stabilisation benefit to borrowers.•Macroprudential is more effective than monetary policy at stabilising against shocks.•Stabilisation works best when both monetary and macroprudential policy are used.

Suggested Citation

  • Ben-Gad, Michael & Pearlman, Joseph & Sabuga, Ivy, 2022. "An analysis of monetary and macroprudential policies in a DSGE model with reserve requirements and mortgage lending," Economic Modelling, Elsevier, vol. 116(C).
    • Handle: RePEc:eee:ecmode:v:116:y:2022:i:c:s0264999322002127
    DOI: 10.1016/j.econmod.2022.105966
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    More about this item

    Keywords

    Reserve requirements; Endogenous loan defaults; Welfare;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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