{
  "title": "Synergies Between Monetary and Macroprudential Policies in Thailand",
  "publication": "IMF Working Papers, June 5, 2020",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2020/06/05/synergies-between-monetary-and-macroprudential-policies-in-thailand-49266",
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  "summary": "A dynamic stochastic general equilibrium (DSGE) model tailored to the Thai economy is used to explore the performance of alternative monetary and macroprudential policy rules when faced with shocks that directly impact the financial cycle.",
  "sections": [
    {
      "heading": "Summary and Model",
      "content": "- Authors: Ichiro Fukunaga, Jie Yu\n- Date: June 5, 2020\n- Methodology: A dynamic stochastic general equilibrium (DSGE) model tailored to the Thai economy.\n- Shock focus: Shocks that directly impact the financial cycle.\n- Principal model comparison: alternative monetary policy rules (including a lean-against-the-wind rule) and macroprudential policy rules (including counter-cyclical, well targeted instruments)."
    },
    {
      "heading": "Key Findings",
      "content": "- The model shows that a monetary policy focused on its traditional inflation and output objectives accompanied by a well targeted counter-cyclical macroprudential policy yields better macroeconomic outcomes than a lean-against-the-wind monetary policy rule under a wide range of assumptions.\n- Emphasis on interactions between monetary policy and macroprudential instruments when financial-cycle shocks are present."
    },
    {
      "heading": "Policy Implications and Recommendations",
      "content": "- Prioritize a monetary policy rule targeting inflation and output stabilization as the primary tool for macroeconomic management.\n- Deploy well targeted counter-cyclical macroprudential policy to address financial-cycle risks and complement monetary policy.\n- Avoid relying primarily on a lean-against-the-wind monetary policy rule for stabilizing financial-cycle shocks, given the model’s indication of weaker macroeconomic outcomes under that approach."
    },
    {
      "heading": "Subjects and Keywords",
      "content": "- Subjects: Financial sector policy and analysis; Financial sector stability; Housing; Inflation; Macroprudential policy; Macroprudential policy instruments; National accounts; Prices.\n- Keywords: Dynamic stochastic general equilibrium model; Financial sector stability; household LTV cap; Housing; housing loan; Inflation; inflation gap; inflation stability; Lean-against-the-wind monetary policy rule; loan; LTV rule; Macroprudential policies; Macroprudential policy; Macroprudential policy instruments; monetary policy; monetary policy transmission; Taylor; Thailand; world interest rate; world interest rate shock; WP; x inflation gap.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2020/06/05/synergies-between-monetary-and-macroprudential-policies-in-thailand-49266"
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    "Authors: Ichiro Fukunaga, Jie Yu",
    "Published: June 5, 2020",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513537023.001",
    "Authors: Ichiro Fukunaga, Jie Yu",
    "Date: June 5, 2020",
    "Methodology: A dynamic stochastic general equilibrium (DSGE) model tailored to the Thai economy.",
    "Shock focus: Shocks that directly impact the financial cycle.",
    "Principal model comparison: alternative monetary policy rules (including a lean-against-the-wind rule) and macroprudential policy rules (including counter-cyclical, well targeted instruments).",
    "The model shows that a monetary policy focused on its traditional inflation and output objectives accompanied by a well targeted counter-cyclical macroprudential policy yields better macroeconomic outcomes than a lean-against-the-wind monetary policy rule under a wide range of assumptions.",
    "Emphasis on interactions between monetary policy and macroprudential instruments when financial-cycle shocks are present.",
    "Prioritize a monetary policy rule targeting inflation and output stabilization as the primary tool for macroeconomic management.",
    "Deploy well targeted counter-cyclical macroprudential policy to address financial-cycle risks and complement monetary policy.",
    "Avoid relying primarily on a lean-against-the-wind monetary policy rule for stabilizing financial-cycle shocks, given the model’s indication of weaker macroeconomic outcomes under that approach.",
    "Subjects: Financial sector policy and analysis; Financial sector stability; Housing; Inflation; Macroprudential policy; Macroprudential policy instruments; National accounts; Prices.",
    "Keywords: Dynamic stochastic general equilibrium model; Financial sector stability; household LTV cap; Housing; housing loan; Inflation; inflation gap; inflation stability; Lean-against-the-wind monetary policy rule; loan; LTV rule; Macroprudential policies; Macroprudential policy; Macroprudential policy instruments; monetary policy; monetary policy transmission; Taylor; Thailand; world interest rate; world interest rate shock; WP; x inflation gap.",
    "**Working Paper**"
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