01719cas a2200253 a 4500 AALejournalIMF017852 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484312674 1018-5941 BD-DhAAL BD-DhAAL Melina, Giovanni. Leaning Against Windy Bank Lending / Giovanni Melina, Stefania Villa. Washington, D.C. : International Monetary Fund, 2017. 1 online resource (68 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 Using an estimated dynamic stochastic general equilibrium model with banking, this paper first provides evidence that monetary policy reacted to bank loan growth in the US during the Great Moderation. It then shows that the optimized simple interest-rate rule features no response to the growth of bank credit. However, the welfare loss associated to the empirical responsiveness is small. The sources of business cycle fluctuations are crucial in determining whether a 'leaning-against-the-wind' policy is optimal or not. In fact, the predominant role of supply shocks in the model gives rise to a trade-off between inflation and financial stabilization. Mode of access: Internet Villa, Stefania. IMF Working Papers; Working Paper ; No. 2017/179 Full text available on IMF http://elibrary.imf.org/view/journals/001/2017/179/001.2017.issue-179-en.xml IMF e-Library