@article{Popoyanb,
abstract = {In this paper we develop an agent-based model to analyze the policy mix between macro-prudential regulations and monetary policy rules when interest rate corridor regimes are fixed. We aim at spelling out the optimal policy combination to achieve the resilience of the financial sector and promote macroeconomic stability. The model endogenously generates interbank market freeze dynamics. Our simulation results show that interest rate corridor width has a potential to be considered a macro-prudential tool due to its capacity to restrain the volatility of interbank interest rate. Moreover, considering the combined and single effects of regulatory tools we fined that LCR is not an adequate instrument to curb with liquidity issues due to its procyclical nature. Among others, the model confirms the expected proposition of Tinbergen's principle showing that ``leaning-against-the-wind'' is complementary policy to macro-prudential ones. Finally, considering combined and standalone Basel III instruments we find that Basel III provides a less vulnerable financial system.},
author = {Popoyan, Lilit and Napoletano, Mauro and Roventini, Andrea},
journal = {Working Paper LEM, forthcoming},
keywords = {DOLFINS{\_}T1.1,DOLFINS{\_}T1.3,DOLFINS{\_}WP1,DOLFINS{\_}working{\_}paper},
mendeley-tags = {DOLFINS{\_}T1.1,DOLFINS{\_}T1.3,DOLFINS{\_}WP1,DOLFINS{\_}working{\_}paper},
title = {{Winter is possibly not coming: Mitigating financial instability in an agent-based model with interbank market}},
year = {2018}
}

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