Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229112
Authors: 
Van der Ghote, Alejandro
Year of Publication: 
2020
Series/Report no.: 
ECB Working Paper No. 2498
Abstract: 
I study macro-prudential policy intervention in economies with secularly low interest rates. Intervention boosts risk-free real interest rates unintentionally, simply as a by-product of containing systemic risk in financial markets. Thus, intervention also boosts the natural rate of return in particular (i.e., the equilibrium risk-free rate that is consistent with inflation on target and production at full capacity). These results point to a novel complementarity between financial stability and macroeconomic stabilization. Complementary is sufficiently strong to generate a divine coincidence if the natural rate is secularly low, but not too low.
Subjects: 
Macro-prudential Policy
Systemic Risk
Natural Rate of Return
JEL: 
E31
E32
E44
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4415-1
Document Type: 
Working Paper

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