Policy Mandates and Institutional Architecture

Ioannis Lazopoulos and Vasco Gabriel

No 419, School of Economics Discussion Papers from School of Economics, University of Surrey

Abstract: The model developed in this paper examines the interaction between monetary and macroprudential policies in promoting macroeconomic stability, highlighting the role of shocks and policy instruments. The paper shows that assigning the mandates of monetary and financial stability to independent authorities enhances macroeconomic stability only when some level of coordination exists between policymakers and it is the dominant institutional arrangement when monetary stability is socially important. Instead, when society values financial stability, internalising the policy spillovers by assigning the two mandates to a single policymaker could become the dominant configuration depending on the model's parameter values.

JEL-codes: E42 E44 E52 E58 E61 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2019-02
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (7)

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Journal Article: Policy mandates and institutional architecture (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:sur:surrec:0419

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