Short and long-term interest rates and the effectiveness of monetary and macroprudential policies

Rubio, Margarita

doi:10.1016/j.jmacro.2015.09.007

Cited by 7 publications

(8 citation statements)

References 26 publications

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“…These findings also concur with Rubio and Carrasco‐Gallego (2014), in which the authors establish that a policy combination of a standard monetary policy and countercyclical LTV regulation enhances the overall economic stability. In addition, our analysis suggests that a policy regime that combines an augmented monetary policy and macroprudential policy can compromise price stability, consistent with Rubio (2016) and Gelain et al . (2013).…”

Section: Efficient Policy Frontierssupporting

confidence: 88%

The Optimal Monetary and Macroprudential Policies for the South African Economy

Liu

Molise

2020

South African J Economics

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We investigate the optimal design and effectiveness of monetary and macroprudential policies in promoting macroeconomic (price) and financial stability for the South African economy. We develop a New Keynesian dynamic stochastic general equilibrium model featuring a housing market, a banking sector and the role of macroprudential and monetary policies. Based on the parameter estimates from the estimation, we conduct an optimal rule analysis and an efficient policy frontier analysis, and compare the dynamics of the model under different policy regimes. We find that a policy regime that combines a standard monetary policy rule and a macroprudential policy rule delivers a more stable economic system with price and financial stability. A policy regime that combines an augmented monetary policy (policy rate reacts to financial conditions) with macroprudential policy is better at attenuating the effects of financial shocks, but at a much higher cost of price instability. Our findings suggest that monetary policy should focus solely on its primary objective of price stability and let macroprudential policy facilitate financial stability on its own.

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Section: Efficient Policy Frontierssupporting

confidence: 88%

The Optimal Monetary and Macroprudential Policies for the South African Economy

Liu

Molise

2020

South African J Economics

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“…Central bank interest rate policies are the most common instruments to impact on macroeconomics in the developed countries. This statement is confirmed by the studies conducted by Caporale et al (2017), Papadamou et al (2015), Wulandari (2012), Rubio (2016), Nucera et al (2017), Horvath (2018), Popescu (2014), Tvaronavičienė (2018), Sanfilippo-Azofra et al (2018).…”

Section: Introductionsupporting

confidence: 63%

Refinancing as an element of control over inflation

Масленников¹,

Korovin²,

Afanasyeva³

2019

JESI

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The article is devoted to the problem of understanding the role and application of refinancing of bank systems as an instrument of monetary policy that can influence the parameters of the money market and the real sector of economy. The author analyses the differences in the impact of refinancing instruments of the central banks to economic indicators of 7 countries, namely: The USA, New Zealand, Norway, South Africa, China, Australia and India. The countries with different levels of economic development and with different banking systems, as well as refinancing mechanisms were chosen for the study. The paper focuses on the impact of changes in the refinancing rate on inflation, as well as on the index of consumer prices. The aspect of management is also considered. Common methods, based on econometrics, can determine the dependence, which does not coincide with the notion of "governance" in its broad sense. Thus, the purpose of the work is an attempt to define the properties of a monetary policy instrument as a control element, whichwhen changed can predetermine a change in the controlled factor. This is an attempt to contribute to the discussion of the role of central banks refinancing in managing inflation. In order to obtain the results the new mathematical analysis tool was used that incorporates the aspects of methods that assess monetary policy's impact on macroeconomic indices, which are not recognized within standard econometric models. For this purpose, the authors used a function that determines the dependence of the coefficient from the correlation between the refinancing rate and the inflation rate based on the length of the period of time used for the temporary data used, the time of the beginning of this period and the time lag of inflation data in relation to these rates of refinancing. The authors suggest that the tool to influence inflation on has a deterministic quality (i.e., depending on the external factors it may lead to the opposite results) and has no stable time lag.

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“…Rubio [18] uses the New Keynesian framework to create a dynamic stochastic general equilibrium [DSGE] model solution that incorporates the real estate market as well as Savings and loan users. The macroeconomy and financial markets are stabilised by monetary guidelines and macro-level prudential policies in two different contexts: when dealing with rates for both short and long terms.…”

Section: Empirical Examination Of How Monetary Policy and Macro-level...mentioning

confidence: 99%

Targeting Financial Stability in Ghana: The Role of Monetary Policy and Macroprudential Regulations

G. Kankpeyeng,

Gabriel Brafu-Insaidoo,

S.Y. Adama

2024

Business, Management and Economics

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This paper examines the effect of Ghana’s macroprudential regulations and monetary policy on the nation’s financial stability. It specifically looks at how these policies interact and what effect they have on Ghana’s financial stability. This is done using the Autoregressive Distributed Lag [ARDL] model to evaluate quarterly data from 2013 Q1 to 2022 Q1 provided by the Bank of Ghana [BoG], Ghana Statistical Service [GSS], and World Development Indicators [WDIs]. The results show that macro-level prudential regulations have no long-term association with financial stability but have a favourable and significant short-term effect. Furthermore, the existence of monetary policy boosts the short-term effects of macro-level prudential regulations on financial stability but has no significant long-term influence. The study recommends that immediate concerns about financial stability can be addressed using a coordinated approach that combines macroprudential regulations and monetary policy, while fine-tuned macro-level prudential regulations should be the principal tool for long-term stability preservation. The BoG should prioritise the development and implementation of measures such as the capital adequacy ratio that address systemic risks.

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Short and long-term interest rates and the effectiveness of monetary and macroprudential policies

Cited by 7 publications

References 26 publications

The Optimal Monetary and Macroprudential Policies for the South African Economy

The Optimal Monetary and Macroprudential Policies for the South African Economy

Refinancing as an element of control over inflation

Targeting Financial Stability in Ghana: The Role of Monetary Policy and Macroprudential Regulations

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