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Credit-Market Imperfection and Monetary Policy Within DSGE Models

Credit-Market Imperfection and Monetary Policy Within DSGE Models

Salha Ben Salem, Nadia Mansour, Moez Labidi
Copyright: © 2021 |Pages: 27
ISBN13: 9781799877165|ISBN10: 1799877167|EISBN13: 9781799877189
DOI: 10.4018/978-1-7998-7716-5.ch002
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MLA

Ben Salem, Salha, et al. "Credit-Market Imperfection and Monetary Policy Within DSGE Models." Using Strategy Analytics to Measure Corporate Performance and Business Value Creation, edited by Sandeep Kumar Kautish, IGI Global, 2021, pp. 16-42. https://doi.org/10.4018/978-1-7998-7716-5.ch002

APA

Ben Salem, S., Mansour, N., & Labidi, M. (2021). Credit-Market Imperfection and Monetary Policy Within DSGE Models. In S. Kautish (Ed.), Using Strategy Analytics to Measure Corporate Performance and Business Value Creation (pp. 16-42). IGI Global. https://doi.org/10.4018/978-1-7998-7716-5.ch002

Chicago

Ben Salem, Salha, Nadia Mansour, and Moez Labidi. "Credit-Market Imperfection and Monetary Policy Within DSGE Models." In Using Strategy Analytics to Measure Corporate Performance and Business Value Creation, edited by Sandeep Kumar Kautish, 16-42. Hershey, PA: IGI Global, 2021. https://doi.org/10.4018/978-1-7998-7716-5.ch002

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Abstract

This survey presented the various ways that are utilized in the literature to include financial market frictions in dynamic stochastic general equilibrium (DSGE) models. It focuses on the fundamental issue: to what extent the Taylor rules are optimal when the central bank introduces the goal of financial stability. Indeed, the latest financial crisis shows that the vulnerability of the credit cycle is considered the main source for the amplification of a small transitory shock. This conclusion changed the instrument that drives the transmission of monetary policy through the economy and pushed the policymakers to include financial stability as a second objective of the central bank.

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