Financial Stability and Interest-Rate Policy: A Quantitative Assessment of Costs and Benefits

Author/Editor:

Andrea Pescatori ; Stefan Laseen

Publication Date:

March 21, 2016

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Should monetary policy use its short-term policy rate to stabilize the growth in household credit and housing prices with the aim of promoting financial stability? We ask this question for the case of Canada. We find that to a first approximation, the answer is no— especially when the economy is slowing down.

Series:

Working Paper No. 2016/073

Subject:

English

Publication Date:

March 21, 2016

ISBN/ISSN:

9781475522679/1018-5941

Stock No:

WPIEA2016073

Pages:

29

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