Macroprudential regulation in the post-crisis era: Has the pendulum swung too far?

Juyi Lyu, Vo Phuong Mai Le, David Meenagh and A. Patrick Minford

Journal of International Financial Markets, Institutions and Money, 2021, vol. 74, issue C

Abstract: This paper presents an institutional model to investigate the cooperation between a government and a central bank. The former selects the monetary policy and then delegates the organization of macroprudential policy to the latter. Their policy stances are the result of sequential constrained utility maximization. Using indirect inference, we find a set of coefficients that can capture the UK policy stances for 1993–2016. This suggests post-crisis regulation has been overly intrusive. Finally, we show that this regulatory dilemma can be avoided by committing to a highly stabilizing monetary regime that uses QE extensively.

Keywords: Bank regulation; Financial stability; Monetary policy; Public choice theory (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1042443121001001
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Macroprudential Regulation in the Post-Crisis Era: Has the Pendulum Swung Too Far? (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:74:y:2021:i:c:s1042443121001001

DOI: 10.1016/j.intfin.2021.101381

Access Statistics for this article

Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely

More articles in Journal of International Financial Markets, Institutions and Money from Elsevier
Bibliographic data for series maintained by Catherine Liu ().