01814cas a2200265 a 4500 AALejournalIMF015326 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513579245 1018-5941 BD-DhAAL BD-DhAAL Laseen, Stefan. Systemic Risk : A New Trade-off for Monetary Policy? / Stefan Laseen, Andrea Pescatori, Jarkko Turunen. Washington, D.C. : International Monetary Fund, 2015. 1 online resource (46 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students 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 unexpected increase in policy rates reduces output, inflation, and asset prices without fundamentally mitigating financial risks. We also find that while a systematic monetary policy reaction can improve welfare, it is too simplistic: (1) it is highly sensitive to parameters of the model and (2) is detrimental in the presence of falling asset prices. Macroprudential policy, similar to a countercyclical capital requirement, is more robust and leads to higher welfare gains. Mode of access: Internet Pescatori, Andrea. Turunen, Jarkko. IMF Working Papers; Working Paper ; No. 2015/142 Full text available on IMF http://elibrary.imf.org/view/journals/001/2015/142/001.2015.issue-142-en.xml IMF e-Library