Cost-Benefit Analysis of Leaning Against the Wind

Previously circulated as "Cost-Benefit Analysis of Leaning Against the Wind: Are Costs Larger Also with Less Effective Macroprudential Policy?" I thank the editors, the referees, David Aikman, David Archer, Vivek Arora, Tamim Bayoumi, Christoph Bertsch, Helge Berger, Olivier Blanchard, Claudio Borio, Lael Brainard, Giovanni Dell'Ariccia, Andrew Filardo, Stanley Fischer, Kevin Fletcher, Karl Habermeier, Vikram Haksar, Dong He, Olivier Jeanne, Anil Kashyap, Michael Kiley, Jun Il Kim, Luc Laeven, Nellie Liang, Lien Laureys, Stefan Laséen, David López-Salido, Tommaso Mancini Griffoli, Loretta Mester, Edward Nelson, William Nelson, Andrea Pescatori, Bengt Petersson, Rafael Portillo, Pau Rabanal, Phurichai Rungcharoenkitkul, Damiano Sandri, Sunil Sharma, Oreste Tristani, Gregory Thwaites, David Vestin, José Viñals, and participants in seminars at Bank of Canada, Bank of England, Bank of Italy, BIS, ECB, Federal Reserve Board, IMF, NBER Summer Institute, the National Institute of Economic Research, Norges Bank, Sveriges Riksbank, and University of Maryland and in the conference on Macroeconomics and Monetary Policy at the Federal Reserve Bank of San Francisco for helpful discussions and comments. I also thank the IMF and the ECB for their hospitality during, respectively, my visit January 2015-March 2016 as an IMF Research Department Resident Scholar and my visit September-November 2016 as Wim Duisenberg Research Fellow. Any views expressed are those of the author and do not necessarily represent the views of the IMF, the ECB, the Eurosystem, or the NBER. A previous, longer version was published as IMF Working Paper WP/16/3.

• January 19, 2016
• January 10, 2017