The relationship between price and financial stability in new monetary policy designs: the case of the US using the TVP-SVAR model

Ömer Yalçinkaya, Ali Kemal Çelik and Hatira Sadeghzadeh Emsen ()

Estudios de Economia, 2021, vol. 48, issue 2 Year 2021, 249-276

Abstract: This paper aims to explain the relationship between price and financial sta bility in monetary policy designs that have developed since the 1990s and to empirically examine the relationship between price and financial stability in the monetary policy designs of the US. To this effect, the study examines the time-varying structure of the relationship between price and financial stability in the US, where monetary policies are designed to achieve price stability, full employment and moderate long-term interest rate targets using the TVP-SVAR model for the period 1993:12-2020:12. The results of the study demonstrate the presence of a reciprocal relationship within the scope of the new environment hypothesis, which varies over time between price and financial stability in the US over the study period. These results broadly suggest the necessity of redesigning monetary policies in the US based on the propositions of the new environment hypothesis and considering the varying structure of the relationships, symmetrical or asymmetrical, between monetary and financial stability variables over time.

Keywords: Monetary policy designs; new environment hypothesis; US; TVP-SVAR. (search for similar items in EconPapers)
JEL-codes: B40 C58 E44 E52 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/64973/68349 (application/pdf)

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:udc:esteco:v:48:y:2021:i:2:p:249-276

Access Statistics for this article

Estudios de Economia is currently edited by Rómulo Chumacero

More articles in Estudios de Economia from University of Chile, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Verónica Kunze ().