Series: IMF Working Papers
Author(s): Stefan Laseen , Andrea Pescatori , and Jarkko Turunen
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 30 June 2015
Keywords: Endogenous Financial Risk, DSGE models, Non-Linear Dynamics, Policy Evaluation, financial sector, welfare, prices, equity,
We introduce time-varying systemic risk in an otherwise standard New-Keynesian model to study whether a simple leaning-against-the-wind policy can reduce systemic risk and improve welfare. We find that an unexpecte...