Norges Bank

Working Paper

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

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

Abstract:

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?

Norges Bank’s working papers present research projects and reports that are generally not in their final form. Other analyses by Norges Bank’s economists are also included in the series. The views and conclusions in these documents are those of the authors.

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ISSN 1502-8190 (online)

Published 3 October 2017 09:20
Published 3 October 2017 09:20