Financial stability and interest-rate policy A quantitative assessment of costs and benefit

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. Afin de favoriser la stabilité fi...

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Bibliographic Details
Published inThe Canadian journal of economics Vol. 53; no. 3; pp. 1246 - 1273
Main Authors Laséen, Stefan, Pescatori, Andrea
Format Journal Article
LanguageEnglish
Published Malden Wiley 01.08.2020
Wiley Subscription Services, Inc
Blackwell Publishing Ltd
Subjects
Analysis
Approximation
Courts
Housing
Housing costs
Housing prices
Interest rates
Monetary policy
Mortgages
Prices
Canada
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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. Afin de favoriser la stabilité financière, la politique monétaire devrait-elle utiliser son taux directeur à court terme pour équilibrer la croissance de l’endettement des ménages et du prix des logements? Nous posons cette question pour le Canada. Dans une première approximation, notre réponse est négative.
ISSN:0008-4085
1540-5982
DOI:10.1111/caje.12458