Monetary Policy and Banking Stability

We propose a new policy framework whereby the central bank chooses short-term interest rates and the aggregate equity ratio, while banking regulation and supervision, including the determination of bank-specific capital requirements, would be left to separate bank-regulatory authorities. In particular, we are concerned with the following issues:

• Should monetary policy and banking regulations be conducted separately?
• How akin is inflation targeting to bank equity targeting?
• How should interest rate, and aggregate bank equity policy be coordinated?
• How can monetary policy help resolve banking crises?

Publications:

• The Workout of Banking Crises: A Macroeconomic Perspective, CESifo Economic Studies, 49, 2003, 233-258.
  (Hans Gersbach and Jan Wenzelburger)
  Working Paper Version: available here

Working Papers:

• The Dynamics of Deposit Insurance and the Consumption Trap
  (Hans Gersbach and Jan Wenzelburger)
• Countercyclical Taxation and Price Dispersion
  (E. Mayer and O. Grimm)
• Macroeconomic Policy in a Heterogeneous Monetary Union
  (O. Grimm and S. Ried)
• Fiscal Discipline and Stability under Currency Board Systems
  (O. Grimm)
• Modeling Two Macro Policy Instruments
  Interest Rates and Aggregate Capital Requirements
  (Hans Gersbach and Volker Hahn)

Policy Briefs:

• Double Targeting for Central Banks with Two Instruments: Interest Rates and Aggregate Bank Equity
  (Hans Gersbach)
• Inflation Targeting and Bank Equity Rules: Parallels and Lessons
  (Hans Gersbach and Volker Hahn)
• Inflation Forecast Contracts
  (Hans Gersbach and Volker Hahn)

Team Members:

Hans Gersbach, Volker Hahn

Cooperation partners:

Oliver Grimm