A Theory of Macroprudential Policies in the Presence of Nominal Rigidities

Emmanuel Farhi, Iván Werning

NBER Working Paper No. 19313
Issued in August 2013, Revised in June 2015

---- Acknowledgements ----

This paper was first circulated under the title "On the Inefficiency of Financial Market Equilibria in Macroeconomic Models with Nominal Rigidities". We thank Fernando Alvarez, Adrien Auclert, Markus Brunnermeier, Gauti Eggertsson, Olivier Jeanne, Guido Lorenzoni, Nobuhiro Kiyotaki, Anton Korinek, John Geanakoplos, Ben Moll, Herakles Polemarchakis, Tomas Sargent, Jean Tirole, Jaume Ventura, for useful comments. We thank seminar and conference participants at various seminars and conferences. Ben Hebert provided outstanding research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

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