Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/238163 
Authors: 
Year of Publication: 
2019
Series/Report no.: 
NBB Working Paper No. 376
Publisher: 
National Bank of Belgium, Brussels
Abstract: 
This paper evaluates the welfare cost of business cycles and the effects of monetary policies in a DSGE model tailored to a small open emerging economy. The model generates rich business cycle fluctuations, features labor market idiosyncratic risks and accounts for imperfect financial and capital markets inclusion. In this context, households excluded from financial and capital markets experience larger costs of business cycle fluctuations due to their inability to hedge against labor market idiosyncratic risks. Different degrees of exposure to different types of risks generate divergent preferences regarding the conduct of monetary policy. While a strong response to inflation deviation from target maximizes welfare for included households, excluded households benefit the most from unemployment and wage stabilization policies.
Subjects: 
Monetary policy
financial exclusion
idiosyncratic risks
labor markets
emerging economies
SOE
DSGE
JEL: 
E3
E52
E32
C51
Document Type: 
Working Paper

Files in This Item:
File
Size
1.46 MB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.