THE INTERACTION BETWEEN MONETARY POLICY AND MACROPRUDENTIAL TOOLS: EMPIRICAL EVIDENCE OF THE SOUTHERN MEDITERRANEAN COUNTRIES
Keywords:
monetary policy, macroprudential tools, interactionAbstract
In this paper, we analyze the interactions between monetary policy and macroprudential tools in the southern Mediterranean over the period 2000-2017. This research examines the relationship between monetary policy and macroprudential tools using a structural vector Auto-regressive model (SVAR). Our empirical results show that macroprudential tools should be used only as a complement to monetary policy to achieve financial stability but cannot be a substitute to achieve price stability.
References
Abdullah, M., Chani, M. I., & Ali, A. (2013). Determinants of Money Demand in Pakistan: Disaggregated
Expenditure Approach. World Applied Science Journal, 24(6), 765-771.
Ahmed, K., & Ali, A. (2016). Rising Population and Food Insecurity Linkages in Pakistan: Testing Malthusian
Population Growth Theory. International Journal of Economics and Empirical, 4 (1), 1-8.
Alfred, A., Haug, T.J., Anna, S. (2013). combining Monetary and Fiscal policy in a VAR for a Small Open
Economy. Economics Discussion Papers No. 1313.
Ali, A. & Naeem, M.Z. (2017). Trade Liberalization and Fiscal Management of Pakistan: A Brief Overview.
Policy Brief-Department of Economics, PU, Lahore. 2017 (1), 1-6.
Ali, A. (2011). Disaggregated import demand functions of Pakistan; An empirical Analysis. M-Phil Thesis, NCBA&E, Lahore, Pakistan, 1-70.
Ali, A. (2015). The impact of macroeconomic instability on social progress: an empirical analysis of Pakistan. (Doctoral dissertation, National College of Business Administration & Economics Lahore).
Ali, A. (2018). Issue of Income Inequality Under the Perceptive of Macroeconomic Instability: An Empirical
Analysis of Pakistan. Pakistan Economic and Social Review, 56(1), 121-155.
Ali, A. and Bibi, C. (2017). Determinants of Social Progress and its Scenarios under the role of Macroeconomic
Instability: Empirics from Pakistan. Pakistan Economic and Social Review 55 (2), 505-540.
Ali, A. Audi, M. Bibi, C. & Roussel, Y. (2021). The Impact of Gender Inequality and Environmental Degradation on Human Well-being in the Case of Pakistan: A Time Series Analysis. International Journal of Economics and Financial Issues, 11(2), 92-99
Ali, A., & Ahmad, K. (2014). The Impact of Socio-Economic Factors on Life Expectancy in Sultanate of Oman: An Empirical Analysis. Middle-East Journal of Scientific Research, 22(2), 218-224.
Ali, A., & Audi, M. (2016). The Impact of Income Inequality, Environmental Degradation and Globalization on Life Expectancy in Pakistan: An Empirical Analysis. International Journal of Economics and Empirical Research, 4 (4), 182-193.
Ali, A., & Audi, M. (2018). Macroeconomic Environment and Taxes Revenues in Pakistan: An Application of
ARDL Approach. Bulletin of Business and Economics (BBE), 7(1), 30-39.
Ali, A., & Rehman, H. U. (2015). Macroeconomic instability and its impact on the gross domestic product: an empirical analysis of Pakistan. Pakistan Economic and Social Review, 285-316.
Ali, A., & Şenturk, I. (2019). Justifying the Impact of Economic Deprivation, Maternal Status and Health infrastructure on Under-Five Child Mortality in Pakistan: An Empirical Analysis. Bulletin of Business and Economics, 8(3), 140-154.
Ali, A., & Zulfiqar, K. (2018). An Assessment of Association between Natural Resources Agglomeration and
Unemployment in Pakistan. Pakistan Vision, 19(1), 110-126.
Ali, A., Ahmed, F., & Rahman, F. U. (2016). Impact of Government Borrowing on Financial Development (A
case study of Pakistan). Bulletin of Business and Economics (BBE), 5(3), 135-143.
Ali, A., Mujahid, N., Rashid, Y., & Shahbaz, M. (2015). Human capital outflow and economic misery: Fresh evidence for Pakistan. Social Indicators Research, 124(3), 747-764.
Angela, M., José-Luis, P. (2013). Monetary Policy, Macroprudential Policy and Banking Stability Evidence from the Euro Area. Working Paper series , No 1560 .
Angelini, P., Neri, S., Panetta, F. (2011). Monetary and macroprudential policies. Working Paper Series, No
/July 2012.
Angeloni, I., Faia, E. (2013). Capital Regulation and Monetary Policy with Fragile Banks. Journal of Monetary
Economics, 60(3), 311-324.
Arshad, S., & Ali, A. (2016). Trade-off between Inflation, Interest and Unemployment Rate of Pakistan: Revisited. Bulletin of Business and Economics (BBE), 5(4), 193-209.
Ashley, D. (2014). The interaction between monetary and macro-prudential policy. Reserve Bank of New
Zealand: Bulletin, 77(2), 200-240.
Ashraf, I., & Ali, A. (2018). Socio-Economic Well-Being and Women Status in Pakistan: An Empirical
Analysis. Bulletin of Business and Economics (BBE), 7(2), 46-58.
Audi, M & Ali, A. (2017). Socio-Economic Status and Life Expectancy in Lebanon: An Empirical Analysis.
Archives of Business Research, 5(11), 159-170
Audi, M. & Ali, A. (2017). Environmental Degradation, Energy consumption, Population Density and Economic Development in Lebanon: A time series Analysis (1971-2014). Journal of International Finance and Economics, 17(1), 7-20.
Audi, M. Ali, A. & Roussel, Y. (2021). Aggregate and Disaggregate Natural Resources Agglomeration and
Foreign Direct Investment in France. International Journal of Economics and Financial Issues,
(1), 147-156.
Audi, M., & Ali, A. (2016). A Causality and Co-integration Analysis of Some Selected Socio-Economic
Determinants of Fertility: Empirics from Tunisia. Bulletin of Business and Economics (BBE), 5(1),
-36.
Beau, D., Clerc, L., Mojon, B. (2012). Macroprudential Policy and the Conduct of Monetary Policy. Banque de
France, Working Paper No. 390.
Bin, W., Tao, Sun. (2013). How Effective are Macroprudential Policies in China? IMF Working Paper 13/75, March ((Washington: International Monetary Fund).
Blanchard, O. J. (1989). A Traditional Interpretation of Macroeconomic Fluctuations. American Economic review, 79(5), 1114 -1164.
Blanchard, O.J.,Quah,D. (1989). The Dynamic effects of Aggregate Demand and Supply Disturbances. The
American Economic review, 79(4), 655-673.
Carlstrom, C., Timothy, F. (2010). Optimal Monetary Policy in a Model with Agency Costs. Journal of Money, Credit and Banking, 42, 37–70.
Caruana, J. (2010b). Macroprudential policy: working towards a new consensus. Bank for International
Settlements, Washington DC, 23 April.
Cecchetti, S. (2008). Do capital adequacy requirements matter for monetary policy?” Economic Inquiry 46(4), pp. 643–59.
Christensen, I., Cesaire, Meh., Kevin, Moran. (2011). Bank Leverage Regulation and Macroeconomic
Dynamics. Bank of Canada Working Paper 11–32.
Christiano, L., Eichenbaum, M. (2007). Alternative Procedures for Estimating Vector Autoregressions Identified with Long-Run Restrictions. Journal of the European Economic Association, 4(2-3), 475-483.
Claessens, S., Ghosh,S.R ., Mihet, R. (2013). Macro-Prudential Policies to Mitigate Financial System
Vulnerabilities. Journal of International Money and Finance, 39, 153–185.
Curdia, V., Michael, W. (2009). Credit Frictions and Optimal Monetary Policy. BIS Working Paper 278 (Basel: Bank for International Settlements).
Demchuk , O., Tyziak ,T., Przystupa , J., Sznajderska, A., Wrobel, E. (2012). Monetary policy transmission mechanism in Poland. What do we know in 2012? National Bank of Poland, Working Papers, 116.
Hadri , K. (2000) , “testing for stationarity in heterogenous panel data. Economitrics journal, 3, 148.
Jan, B. (2012). The Interaction of Monetary and Macroprudential Policies. IMF Board Paper and Background
Paper, January (Washington: International Monetary Fund).
Kannan, P., Pau,R., Alasdair, S. (2009). Monetary and Macroprudential Policy Rules in a Model with House
Price Booms. IMF Working Paper 09/251 (Washington: International Monetary Fund).
Kuttner,K., Shim,I. (2012). Taming the real estate beast: the effects of monetary and macroprudential policies on housing prices and credit. Proceedings of the Reserve Bank of Australia-BIS conference on Property markets and financial.
Levin, A., Lin,C.F. (1992). Unit roots Tests in Panel Data: New results. Working paper n°9356, University of san Diego.
Lim, C. H., Columba, A., Costa, P., Kongsamut, A., Otani, M., Saiyid, T., Wezel, X. W. (2011).
Macroprudential Policy: What Instruments and How Are They Used? Lessons from Country
Experiences. IMF Working Paper 238 (Washington: International Monetary Fund).
Maddala, G. S., Wu, S. (1999). A comparative study of unit root tests with panel Data and a new simple Test.
Oxford Bulletin of Economics and statistics, 61, 631-652.
Quémard, J. Luc. Golitin,V. (2005). Le risque de taux d’intérêt dans le système bancaire français. Banque de
France, Revue de la stabilité financière N°6.
Quint , D., rabanal , P. (2011). Monetary and Macroprudential Policy in an Estimated DSGE Model of the Euro
Area. IMF Working /13/209.
Roussell, Y, Ali, Ali. and Audi, M. (2021). Measuring the Money Demand in Pakistan: A Time Series Analysis.
Bulletin of Business and Economics, 10(1), 27-41.
Sarr , F. ( 2010). Analyse de l’interaction des politiques budgétaire et monétaire au sein de l’Union Economique
et Monétaire Ouest Africaine. Séminaire CREM-PROJECT.
Şenturk, İ & Ali, A. (2021). Socioeconomic Determinants of Gender-Specific Life Expectancy in Turkey: A Time Series Analysis. Sosyoekonomi, 29(49), 85-111.
Soyoung, K., Aaron, M. (2017). Effects of monetary and macroprudential policies –evidence from inflation targeting economies in the Asia- Pacific region and potential implications for China. BOFIT Discussion papers.
Stephen, G. C., Marion, K. (2012). When capital adequacy and interest rate policy are substitutes (and when they are not). BIS Working Papers No 379.
Svensson, L. E. (2012). Inflation Targeting and Financial Stability. Sveriges Riks bank Economic Review, 20(1),
-40.
Tovar, C. E ., Escribano,M.G., Martin , M.V. (2012). Credit Growth and the Effectiveness of Reserve Requirements and Other Macroprudential Instruments in Latin America”, IMF Working paper, WP/12/142.
William, B., Skander, J. V., Egon, Z. (2012). Interest Rate Risk and Bank Equity Valuations. Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs Federal Reserve Board, Washington, D.C.
Woodford, F. (2011). Inflation Targeting and Financial Stability. mimeo, Columbia University.
