In this paper, we analyze the implications of macroprudential and monetary policies for business cycles, welfare, and …nancial stability. We consider a dynamic stochastic general equilibrium (DSGE) model with housing and collateral constraints. A macroprudential rule on the loan-to-value ratio (LTV), which responds to credit growth, interacts with a traditional Taylor rule for monetary policy.We compute the optimal parameters of these rules both when monetary and macroprudential policies act in a coordinated and in a non-coordinated way. We …nd that both policies acting together unambiguously improves the stability of the system. In both cases, this interaction is welfare improving for the society, especially in the case of the non-coordinated game. There is though a trade-o¤ between borrowers and savers. However, borrowers can compensate the saver's welfare loss à la Kaldor-Hicks to achieve a Pareto-superior outcome.

The aim of this paper is twofold. First, I study how the proportion of …xed and variable-rate mortgages in an economy can a¤ect the way shocks are propagated. Second, I analyze optimal implementable simple monetary policy rules and the welfare implications of this proportion. I develop and solve a New Keynesian dynamic stochastic general equilibrium model that features a housing market and a group of constrained individuals who need housing collateral to obtain loans. A given proportion of constrained households borrows at a variable rate, while the rest borrows at a …xed rate.The model predicts that in an economy with mostly variable-rate mortgages, an exogenous interest rate shock has larger e¤ects on borrowers than in a …xed-rate economy. Aggregate e¤ects are also larger for the variable-rate economy. For plausible parametrizations, di¤erences are muted by wealth e¤ects on labor supply and by the presence of savers. More persistent shocks, such as in ‡ation target and technology shocks, cause larger aggregate di¤erences. From a normative perspective I …nd that, in the presence of collateral constraints, the optimal Taylor rule is less aggressive against in ‡ation than in the standard sticky-price model. Furthermore, for given monetary policy, a high proportion of …xed-rate mortgages is welfare enhancing.

This paper studies the implications of cross-country housing-market heterogeneity in a monetary union for both shock transmission and welfare. I develop a two-country new Keynesian general equilibrium model with housing and collateral constraints to explore this issue. The conventional wisdom is that welfare would be higher in a monetary union if mortgage markets were homogeneous. This paper shows instead that welfare is higher only when homogenization does not result in higher aggregate volatility (because of …nancial accelerator e¤ects) or does not redistribute too much wealth from borrowers to savers.

One of the most salient feature of the Spanish housing market, compared to other European economies, is its relatively low rental share. This may be partly attributed to the existence of fi scal distortions in Spain favoring ownership. In this paper, we simulate the potential efects of different policy measures aimed at homogenizing the fi scal treatment of ownership and renting and improving the effi ciency of the rental market. We do so in the context of a DSGE model featuring a market for owner-occupied and rented housing, as well as collateral constraints in loan markets. We fi nd that eliminating the existing subsidy to house purchases, introducing a comparable subsidy to rental payments or increasing the effi ciency in the production of housing rental services raise the rental share by a similar amount. However, their implications in terms of the construction sector differ.

The aim of this paper is to study the interaction between the Basel banking regulations and monetary policy. In order to do that, we use a dynamic stochastic general equilibrium (DSGE) model with a housing market, banks, borrowers, and savers. First, we …nd that higher capital requirement ratios (CRR), implied by the Basel regulations, has distributional e¤ects among agents: an increase in the welfare of borrowers at the expense of savers and banks. However, if we let monetary policy to react optimally to the new regulatory framework, it becomes more aggressive, to compensate for a lower money multiplier. As a result, this policy combination brings a more stable economic and …nancial system. Finally, we analyze the optimal way to implement the countercyclical capital bu¤er stated by Basel III. We propose that it follows a macroprudential rule so that the CRR responds to deviations of credit from its steady state. We …nd that, for households, the optimal implementation of this rule together with monetary policy represents a welfare improvement with respect to Basel I and II and brings extra …nancial stability.