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3 - Financial Intermediation and Monetary and Macroprudential Policies

Published online by Cambridge University Press:  09 August 2018

By
Stefano Neri
Edited by
Paul Mizen ,
Margarita Rubio  and
Philip Turner
Paul Mizen
Affiliation:
University of Nottingham
Margarita Rubio
Affiliation:
University of Nottingham
Philip Turner
Affiliation:
Universität Basel, Switzerland
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Summary

New-Keynesian Dynamic Stochastic General Equilibrium (NK-DSGE) models have been severely criticised after the outbreak of the global financial crisis in 2008. Intensive research is underway in both academia and central banks to incorporate a more realistic modelling of financial intermediation and a role for macroprudential policy. Given the technical and computational difficulties arising from modelling systemic risk, it may take some time before economists develop new models that allow a comprehensive and integrated approach to the study of the linkages between financial intermediation and the real economy and the role of policies to promote and preserve financial stability. In the meantime, existing models can be used for the analysis of monetary and macroprudential policy and their interaction.

Type
Chapter
Information
Macroprudential Policy and Practice , pp. 61 - 86
Publisher: Cambridge University Press
Print publication year: 2018

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