Macroprudential and Monetary Policies : The Need to Dance the Tango in Harmony (original) (raw)

2019, RePEc: Research Papers in Economics

Considering a sample of 37 emerging and industrialised economies from 2000Q1 to 2014Q4, we empirically assess the effectiveness of macroprudential policies in curbing domestic credit growth, and whether this effectiveness is affected by monetary policy conditions. We obtain three important results. First, in line with previous research, our findings suggest that an overall tightening in macroprudential policies is associated with a reduction in credit growth. Second, we show that a restrictive monetary policy enhances the impact of macroprudential tightening actions on credit growth. Third, we find evidence that monetary policy helps to reduce the transmission delay of macroprudential policy actions. Consequently, results that we obtain confirm the need for coordination between both policies.

Sign up for access to the world's latest research.

checkGet notified about relevant papers

checkSave papers to use in your research

checkJoin the discussion with peers

checkTrack your impact