This paper investigates the optimal monetary policy response to a shock to collateral when policymakers act under … constrained consumers. Our results confirm the literature on model uncertainty with respect to a cost-push shock. Insuring against … model misspecification leads to a more aggressive policy response. The same is true for a shock to collateral. A preference …

We assess the strength of the impact of a monetary policy shock on financial crisis probability in Norway. Policy … monetary policy shock on crisis probability is about 10 times larger than what previous studies suggest. The large impact is … mostly due to a fall in property prices and banks' wholesale funding in response to a contractionary monetary policy shock …