The recent financial crisis has highlighted the interconnectedness between macroeconomic and financial stability and has raised the question of whether and how to combine the corresponding main policy instruments (interest rate and bank-capital requirements). This paper offers a characterization...

We study the role of monetary policy when asset-price bubbles may form due to herd behavior in investment in an asset whose return is uncertain. To that aim, we build a simple general equilibrium model whose agents are households, entrepreneurs, and a central bank. Entrepreneurs receive private...

In this paper we look for interest rate rules ensuring strong local equilibrium determinacy,i.e. making sure that there is a unique equilibrium starting out in the neighbourhood of thesteady state and that this equilibrium remains constantly in that neighbourhood. We showin a general framework...