Synergies between Monetary and Macroprudential Policies in Thailand

A dynamic stochastic general equilibrium (DSGE) model tailored to the Thai economy isused to explore the performance of alternative monetary and macroprudential policy ruleswhen faced with shocks that directly impact the financial cycle. In this context, the modelshows that a monetary policy focused on its traditional inflation and output objectivesaccompanied by a well targeted counter-cyclical macroprudential policy yields bettermacroeconomic outcomes than a lean-against-the-wind monetary policy rule under a widerange of assumptions