An analysis of monetary and macroprudential policies in a DSGE model with reserve requirements and mortgage lending

• Raising the reserve ratio leads to borrowers' welfare gains at the expense of savers. • Macroprudential policy stabilises the economy in response to a risk shock. • Macroprudential policy generates a stabilisation benefit to borrowers. • Macroprudential is more effective than monetary policy at stabilising against shocks. • Stabilisation works best when both monetary and macroprudential policy are used.