The Macroprudential Framework: Policy Responsiveness and Institutional Arrangements

Abstract

This paper gauges if, and how, institutional arrangements are correlated with the use of macroprudential policy instruments. Using data from 39 countries, the paper evaluates policy response time in various types of institutional arrangements for macroprudential policy and finds that the macroprudential framework that gives the central bank an important role is associated with more timely use of macroprudential policy instruments. Policymakers may also tend to use macroprudential instruments more quickly if the ability to conduct monetary policy is somehow constrained. This finding points to the importance of coordination between macroprudential and monetary policy.

Keywords: Macroprudential Policy, Financial stability, Central banks, Monetary policy, Central bank role, macroprudential, institutions, instruments, systemic risk, credit, interest rate., mortgage, central bank, reserve requirement, reserve requirements, mortgage loans, mortgages, monetary fund, housing loans, monetary policy, reserve ratios, liquidity ratio, residential mortgage, residential mortgages, mortgage loan, home equity loans, mortgage lending, home equity, monetary policies, mortgage interest, minimum reserve requirement, marginal reserve requirement, mortgage rates, mortgage regulation, government securities, mortgage interest rates, housing loan, mortgage servicing, inflation, second mor

JEL Classification: G28, E58