02097cas a2200289 a 4500 AALejournalIMF018811 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484380642 1018-5941 BD-DhAAL BD-DhAAL Agur, Itai. Monetary and Macroprudential Policy Coordination Among Multiple Equilibria / Itai Agur. Washington, D.C. : International Monetary Fund, 2018. 1 online resource (33 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 The notion of a tradeoff between output and financial stabilization is based on monetary-macroprudential models with unique equilibria. Using a game theory setup, this paper shows that multiple equilibria lead to qualitatively different results. Monetary and macroprudential authorities have tools that impose externalities on each other's objectives. One of the tools (macroprudential) is coarse, while the other (monetary policy) is unconstrained. We find that this asymmetry always leads to multiple equilibria, and show that under economically relevant conditions the authorities prefer different equilibria. Giving the unconstrained authority a weight on "helping" the constrained authority ("leaning against the wind") now has unexpected effects. The relation between this weight and the difficulty of coordinating is hump-shaped, and therefore a small degree of leaning worsens outcomes on both authorities' objectives. Mode of access: Internet Central Bank imf First Mover imf Monetary Policy imf WP imf IMF Working Papers; Working Paper ; No. 2018/235 Full text available on IMF http://elibrary.imf.org/view/journals/001/2018/235/001.2018.issue-235-en.xml IMF e-Library