Monetary Policy and Macroprudential Policy: New Evidence from a World Panel of Countries

16 Pages Posted: 25 Apr 2017

See all articles by Nicholas Apergis

Nicholas Apergis

University of Piraeus; University of Derby

Date Written: June 2017

Abstract

The event of the recent financial crisis raises the question of whether policy makers could have done more or something different to prevent the build‐up of financial imbalances. This paper contributes to the field of regulatory impact by tackling the debate on whether central banks should ‘lean against the wind’, while in case the response is positive, how macroprudential policies should be combined with monetary policy. Using an augmented Taylor rule and a sample of 127 global economies, the results provide evidence on the importance of macroprudential issues for the implementation of an effective monetary policy. They also document that the type of adopted macroprudential instrument has a substantial effect on such effectiveness, with this policy mix being less ‘integrated’ when the monetary rule aims at primarily safeguarding inflation stability. The results survive robustness checks under alternative assets.

Suggested Citation

Apergis, Nicholas, Monetary Policy and Macroprudential Policy: New Evidence from a World Panel of Countries (June 2017). Oxford Bulletin of Economics and Statistics, Vol. 79, Issue 3, pp. 395-410, 2017. Available at SSRN: https://ssrn.com/abstract=2956953 or http://dx.doi.org/10.1111/obes.12182

Nicholas Apergis (Contact Author)

University of Piraeus ( email )

Karaoli and Dimitriou 80
80 KARAOLI & DIMITRIOU STREET
Piraeus, Attiki 18534
Greece

University of Derby ( email )

Kedleston Road
Derby, Derbyshire DE22 1GB
United Kingdom

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