Working Paper

On the Interplay between Monetary Policy and Macroprudential Policy: A Simple Analytical Framework

Author: Øistein Røisland
Series: Working Paper
Number: 18/2017

Working Paper 18/2017 (PDF 336.1 Kb)


The paper provides a simple analytical framework for analyzing the interplay between monetary policy and macroprudential policy. Three questions are analyzed: (i) Under which assumptions is coordination necessary to implement an optimal policy mix? (ii) Are the two policy instruments substitutes or complements, i.e. should they move in opposite or the same direction as response to a shock? (iii) Can "leaning against the wind" in monetary policy lead to a negative inflation bias?

Published 3 October 2017 09:20