Norges Bank

Staff Memo

Financial factors and the macroeconomy - a policy model

Leif Brubakk and Paolo Gelain
Staff Memo

This paper documents the theoretical structure of an extension of the Norges Bank policy model NEMO. New features include an explicit treatment of the credit market, including a separate banking sector, a role for housing services and house prices, and the option of using macro-prudential instruments as the LTV-ratio and capital requirements as policy instruments. The model rely on building blocks from the recent literature on the interaction between the financial sector and the real economy.

Staff Memos present reports and documentation written by staff members and affiliates of Norges Bank, the central bank of Norway. Views and conclusions expressed in Staff Memos should not be taken to represent the views of Norges Bank.

ISSN 1504-2596 (online)

Published 23 June 2014 17:50
Published 23 June 2014 17:50