01940cas a2200265 a 4500 AALejournalIMF021344 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513561172 1018-5941 BD-DhAAL BD-DhAAL Laureys, Lien. Optimal Simple Objectives for Monetary Policy when Banks Matter / Lien Laureys, Roland Meeks, Boromeus Wanengkirtyo. Washington, D.C. : International Monetary Fund, 2020. 1 online resource (59 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 reconsider the design of welfare-optimal monetary policy when financing frictions impair the supply of bank credit, and when the objectives set for monetary policy must be simple enough to be implementable and allow for effective accountability. We show that a flexible inflation targeting approach that places weight on stabilizing inflation, a measure of resource utilization, and a financial variable produces welfare benefits that are almost indistinguishable from fully-optimal Ramsey policy. The macro-financial trade-off in our estimated model of the euro area turns out to be modest, implying that the effects of financial frictions can be ameliorated at little cost in terms of inflation. A range of different financial objectives and policy preferences lead to similar conclusions. Mode of access: Internet Meeks, Roland. Wanengkirtyo, Boromeus. IMF Working Papers; Working Paper ; No. 2020/244 Full text available on IMF http://elibrary.imf.org/view/journals/001/2020/244/001.2020.issue-244-en.xml IMF e-Library