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dc.contributor.authorWerning, Iván
dc.contributor.authorFarhi, Emmanuel
dc.contributor.authorWerning, Ivan
dc.date.accessioned2018-03-23T18:58:15Z
dc.date.available2018-03-23T18:58:15Z
dc.date.issued2015-06
dc.date.submitted2015-05
dc.identifier.issn0012-9682
dc.identifier.urihttp://hdl.handle.net/1721.1/114273
dc.description.abstractWe propose a theory of monetary policy and macroprudential interventions in financial markets. We focus on economies with nominal rigidities in goods and labor markets and subject to constraints on monetary policy, such as the zero lower bound or fixed exchange rates. We identify an aggregate demand externality that can be corrected by macroprudential interventions in financial markets. Ex post, the distribution of wealth across agents affects aggregate demand and output. Ex ante, however, these effects are not internalized in private financial decisions. We provide a simple formula for the required financial interventions that depends on a small number of measurable sufficient statistics. We also characterize optimal monetary policy. We extend our framework to incorporate pecuniary externalities, providing a unified approach to both externalities. Finally, we provide a number of applications which illustrate the relevance of our theory.en_US
dc.publisherThe Econometric Societyen_US
dc.relation.isversionofhttp://dx.doi.org/10.3982/ECTA11883en_US
dc.rightsCreative Commons Attribution-Noncommercial-Share Alikeen_US
dc.rights.urihttp://creativecommons.org/licenses/by-nc-sa/4.0/en_US
dc.sourceNBERen_US
dc.titleA Theory of Macroprudential Policies in the Presence of Nominal Rigiditiesen_US
dc.typeArticleen_US
dc.identifier.citationFarhi, Emmanuel, and Iván Werning. “A Theory of Macroprudential Policies in the Presence of Nominal Rigidities.” Econometrica 84, no. 5 (2016): 1645–1704.en_US
dc.contributor.departmentMassachusetts Institute of Technology. Department of Economicsen_US
dc.contributor.mitauthorFarhi, Emmanuel
dc.contributor.mitauthorWerning, Ivan
dc.relation.journalEconometricaen_US
dc.eprint.versionOriginal manuscripten_US
dc.type.urihttp://purl.org/eprint/type/JournalArticleen_US
eprint.statushttp://purl.org/eprint/status/NonPeerRevieweden_US
dc.date.updated2018-03-01T18:40:58Z
dspace.orderedauthorsFarhi, Emmanuel; Werning, Ivánen_US
dspace.embargo.termsNen_US
dc.identifier.orcidhttps://orcid.org/0000-0003-2370-5575
mit.licenseOPEN_ACCESS_POLICYen_US


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