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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: © 2023 |Pages: 22
ISBN13: 9781668474600|ISBN10: 1668474603|EISBN13: 9781668474617
DOI: 10.4018/978-1-6684-7460-0.ch021
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MLA

Ben Salem, Salha, et al. "Credit-Market Imperfection and Monetary Policy Within DSGE Models." Research Anthology on Macroeconomics and the Achievement of Global Stability, edited by Information Resources Management Association, IGI Global, 2023, pp. 370-391. https://doi.org/10.4018/978-1-6684-7460-0.ch021

APA

Ben Salem, S., Mansour, N., & Labidi, M. (2023). Credit-Market Imperfection and Monetary Policy Within DSGE Models. In I. Management Association (Ed.), Research Anthology on Macroeconomics and the Achievement of Global Stability (pp. 370-391). IGI Global. https://doi.org/10.4018/978-1-6684-7460-0.ch021

Chicago

Ben Salem, Salha, Nadia Mansour, and Moez Labidi. "Credit-Market Imperfection and Monetary Policy Within DSGE Models." In Research Anthology on Macroeconomics and the Achievement of Global Stability, edited by Information Resources Management Association, 370-391. Hershey, PA: IGI Global, 2023. https://doi.org/10.4018/978-1-6684-7460-0.ch021

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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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