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008	160428s2016    oncd    ob   f000 0 eng d
040	|aCaOODSP|beng
041	|aeng|bfre
043	|an-cn---
086	1 |aFB3-5/2016-19E-PDF
100	1 |aAlpanda, Sami.
245	10|aShould monetary policy lean against housing market booms? |h[electronic resource] / |cby Sami Alpanda and Alexander Ueberfeldt.
260	|a[Ottawa] : |bBank of Canada, |c2016.
300	|aiv, 41 p. : |bfig., tables
490	1 |aStaff Working Paper, |x1701-9397 ; |v2016-19
500	|a"April 2016."
504	|aIncludes bibliographical references (p. 24-27).
520	3 |aShould monetary policy lean against housing market booms? We approach this question using a small-scale, regime-switching New Keynesian model, where housing market crashes arrive with a logit probability that depends on the level of household debt. This crisis regime is characterized by an elevated risk premium on mortgage lending rates, and, occasionally, a binding zero lower bound on the policy rate, imposing large costs on the economy. Using our set-up, we examine the optimal level of monetary leaning, introduced as a Taylor rule response coefficient on the household debt gap. We find that the costs of leaning in regular times outweigh the benefits of a lower crisis probability. Although the decline in the crisis probability reduces volatility in the economy, this is achieved by lowering the average level of debt, which severely hurts borrowers and leads to a decline in overall welfare.
692	07|2gccst|aHousing
692	07|2gccst|aMarkets
692	07|2gccst|aMonetary policy
700	1 |aUeberfeldt, Alexander.
710	2 |aBank of Canada.
830	#0|aStaff working paper (Bank of Canada)|x1701-9397 ; |v2016-19|w(CaOODSP)9.806221
856	40|qPDF|s891 KB|uhttps://publications.gc.ca/collections/collection_2016/banque-bank-canada/FB3-5-2016-19-eng.pdf