The Interaction of Monetary and Macroprudential Policies in the Pursuit of the Central Bank's Primary Objectives

Jan Frait (), Simona Malovana and Vladimir Tomsik

Chapter Thematic Article 1 in CNB Financial Stability Report 2014/2015, 2015, pp 110-120 from Czech National Bank

Abstract: This article is concerned with the interaction of monetary and macroprudential policies at different stages of the financial and business cycle. We focus on identifying related channels of transmission of the two policies and potential feedback between them. Our methodology allows us to obtain information from large number of variables and thus provides a comprehensive picture of the potential impacts of a monetary easing and a macroprudential tightening. The analysis reveals that in some situations monetary policy and macroprudential policy can come into conflict in the pursuit of their objectives. It is therefore crucial to coordinate them and seek an optimal policy mix based on a detailed assessment of the economic outlook.

Date: 2015
ISBN: 978-80-87225-59-2
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:cnb:ocpubc:fsr1415/1

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