policy, and inflation control is subordinate. This article notes that the same is true of macroprudential policy, and it … characterizes the size and sign of its fiscal footprint, as well as the states of the world in which the temptation for fiscal goals … to dominate may be higher. Macroprudential policies that increase the demand for government bonds by banks directly lower …

This paper studies optimal financial policy in a world where the financial sector can become excessively optimistic. I … decompose the welfare effects of bank capital regulation to demonstrate the effects of exuberance and its interaction with …