Macroeconomic policy interaction: State dependency and implications for financial stability in UK: A systemic review
Muhammad Ali Nasir,
JunJie Wu,
Milton Yago () and
Alaa M. Soliman
Cogent Business & Management, 2016, vol. 3, issue 1, 1154283
Abstract:
The association between economic and financial stabilities and influence of macroeconomic policies on the financial sector creates scope of active policy role in financial stability. As a contribution to the existing body of knowledge, this study has analysed the implications of macroeconomic policy interaction/coordination for financial stability, proxied by financial assets, i.e. equity and bonds price oscillation. The critical review and analysis of the existing literature on the subject suggests that there is also ample evidence of interdependence between monetary and fiscal policies and this interrelation necessitates coordination between them for the sake of financial stability. There is also a case for analysing the symmetry of financial markets responses to macroeconomic policy interaction. On methodological and empirical grounds, it is vital to test the robustness of policy recommendations to overcome the limitation of a single empirical approach (Jeffrey–Lindley’s paradox). Hence, the Frequentist and Bayesian approaches should be used in commentary manner. The policy interaction and optimal policy combination should also be analysed in the context of institutional design and major financial events to gain insight into the implications of policy interaction in the periods of stable economic and financial environments as well as period of financial and economic distress.
Date: 2016
References: Add references at CitEc
Citations:
Downloads: (external link)
http://hdl.handle.net/10.1080/23311975.2016.1154283 (text/html)
Access to full text is restricted to subscribers.
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: https://EconPapers.repec.org/RePEc:taf:oabmxx:v:3:y:2016:i:1:p:1154283
Ordering information: This journal article can be ordered from
http://cogentoa.tandfonline.com/journal/OABM20
DOI: 10.1080/23311975.2016.1154283
Access Statistics for this article
Cogent Business & Management is currently edited by Len Tiu Wright and Tahir Nisar
More articles in Cogent Business & Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().