Economics at your fingertips  

Operational aspect of the policy coordination for financial stability: role of Jeffreys–Lindley’s paradox in operations research

Muhammad Ali Nasir, Alaa M. Soliman and Muhammad Shahbaz
Additional contact information
Alaa M. Soliman: Leeds Beckett University

Annals of Operations Research, 2021, vol. 306, issue 1, No 4, 57-81

Abstract: Abstract This study analyses the implications of Jeffery–Lindley’s paradox and Global Financial Crisis (GFC) for the operational aspect of macroeconomic policy coordination for financial stability. Using a Bayesian Vector Auto-regressive model and data from Jan 1985 to June 2016, our key findings suggest that the claim of macroeconomic policy interaction, interdependence and significance of coordinated policy operations for the financial stability holds its ground. The argument in the support for policy coordination for financial stability was found to be robust against the Jeffreys–Lindley’s paradox and in the Post-GFC era. A profound practical, operational and philosophical implication of this study is the positive aspects of Jeffreys–Lindley’s paradox and the possibility of employing the Frequentist and Bayesian estimation techniques as complementing rather competing frameworks.

Keywords: Macroeconomic policy operation; Financial markets; Macroeconomic policy interaction; Bayesian estimation; Jeffreys–Lindley’s paradox; Operations research (search for similar items in EconPapers)
JEL-codes: E44 E61 G12 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
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:

Ordering information: This journal article can be ordered from

DOI: 10.1007/s10479-020-03648-y

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2023-09-15
Handle: RePEc:spr:annopr:v:306:y:2021:i:1:d:10.1007_s10479-020-03648-y