On the relationship between macroprudential policy and other policies

Manuel Ramos-Francia and Santiago García-Verdú
Additional contact information
Manuel Ramos-Francia and Santiago García-Verdú: Bank for International Settlements
Authors registered in the RePEc Author Service: Santiago García-Verdú

A chapter in Macroprudential frameworks, implementation and relationship with other policies, 2017, vol. 94, pp 239-255 from Bank for International Settlements

Abstract: Our note has two related, albeit separate, goals. First, we extend an interest rate policy rule by appending a financial variable to it. Our key assumption is that the relationship between that financial variable and output is uncertain. This is an important assumption because policymakers seek policy rules that are robust to economic relationships. This exercise allows us to discuss a number of issues pertaining to the connection between macroprudential and monetary policies. Second, we examine some of the incentives faced by countries in coordinating their macroprudential policies and, thus, in working towards global financial stability, an international public good. We assume that the probability of a financial crisis decreases as more countries opt for coordination. Moreover, the heterogeneity of expected net benefits implies that countries’ willingness to coordinate differs. While coordination to achieve financial stability faces important challenges, it can be socially optimal.

Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.bis.org/publ/bppdf/bispap94r.pdf (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:bis:bisbpc:94-19

Access Statistics for this chapter

More chapters in BIS Papers chapters from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().