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dc.contributor.authorCao, Jin
dc.contributor.authorChollete, Lorán
dc.date.accessioned2018-06-15T23:31:54Z
dc.date.available2018-06-15T23:31:54Z
dc.date.issued2017-02
dc.identifier248157578
dc.identifier3ae8835a-d350-46e7-bf8d-cf6c0eec8ae6
dc.identifier85010699924
dc.identifier000396995200009
dc.identifier.citationCao , J & Chollete , L 2017 , ' Monetary policy and financial stability in the long run : a simple game-theoretic approach ' , Journal of Financial Stability , vol. 28 , pp. 125-142 . https://doi.org/10.1016/j.jfs.2016.12.002en
dc.identifier.issn1572-3089
dc.identifier.urihttps://hdl.handle.net/10023/14137
dc.descriptionChollete acknowledges support from Finansmarkedsfondet, of the Research Council of Norway.en
dc.description.abstractMany theoretical central bank models use short horizons and focus on a single tradeoff. However, in reality, central banks play complex, long-horizon games and face more than one tradeoff. We account for these strategic interactions in a simple infinite-horizon game with a novel tradeoff: tighter monetary policy deters financial imbalances, but looser monetary policy reduces the likelihood of insolvency. We term these factors discipline and stability effects, respectively. The central bank’s welfare decreases with dependence between real and financial shocks, so it may reduce costs with correlation-indexed securities. An independent central bank cannot in general attain both low inflation and financial stability.
dc.format.extent18
dc.format.extent473943
dc.language.isoeng
dc.relation.ispartofJournal of Financial Stabilityen
dc.subjectCentral bankingen
dc.subjectCorrelation-indexed securityen
dc.subjectDiscipline effecten
dc.subjectStability effecten
dc.subjectStrategic interactionen
dc.subjectHB Economic Theoryen
dc.subjectHG Financeen
dc.subjectNDASen
dc.subject.lccHBen
dc.subject.lccHGen
dc.titleMonetary policy and financial stability in the long run : a simple game-theoretic approachen
dc.typeJournal articleen
dc.contributor.institutionUniversity of St Andrews. School of Economics and Financeen
dc.identifier.doihttps://doi.org/10.1016/j.jfs.2016.12.002
dc.description.statusPeer revieweden
dc.date.embargoedUntil2018-06-15


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