Monetary Policy and Anti-Cyclical Bank Capital Regulation (original) (raw)

The recent global financial crisis has increased interest in macroeconomic models that incorporate financial linkages. Here, we compare the simulation properties of five medium-sized general equilibrium models used in eurosystem central banks which incorporate such linkages. The financial frictions typically considered are the financial accelerator mechanism (convex “ spread” costs related to firms’ leverage ratios) and collateral constraints (based on