“Monetary Policy and Macroprudential Policy: Different and Separate?” revised May 2018, Canadian Journal of Economics, forthcoming. Paper.
The paper discusses how monetary and macroprudential policies can be distinguished, how appropriate goals for the two policies can be determined, whether the policies are best conducted separately or coordinately and by the same or different authorities, and how they can be coordinated when desired. The institutional frameworks in Canada, Sweden, and the UK are briefly compared. The Swedish example of monetary policy strongly “leaning against the wind” and the consecutive policy turnaround is summarized, as well as what estimates have been found of the costs and benefits of leaning against the wind.
JEL Codes: E44, E52, E58, G01, G28
Keywords: Monetary policy, financial stability, macroprudential policy, financial crises