Macroprudential regulation in the post-crisis era: has the pendulum swung too far?

Lyu, Juyi, Le, Vo ORCID: https://orcid.org/0000-0003-3374-9694, Meenagh, David ORCID: https://orcid.org/0000-0002-9930-7947 and Minford, Anthony ORCID: https://orcid.org/0000-0003-2499-935X 2021. Macroprudential regulation in the post-crisis era: has the pendulum swung too far? [Working Paper]. Cardiff Economics Working Papers.

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Abstract

This paper presents an institutional model to investigate the cooperation between a government and a central bank. The former selects the monetary policy and then delegates the organization of macroprudential policy to the latter. Their policy stances are the result of sequential constrained utility maximization. Using indirect inference, we find a set of coefficients that can capture the UK policy stances for 1993-2016. This suggests post-crisis regulation has been overly intrusive. Finally, we show that this regulatory dilemma can be avoided by committing to a highly stabilizing monetary regime that uses QE extensively

Item Type:	Monograph (Working Paper)
Status:	Unpublished
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Publisher:	Cardiff Economics Working Papers
Date of Acceptance:	11 March 2021
Last Modified:	06 Jan 2023 02:11
URI:	https://orca.cardiff.ac.uk/id/eprint/141022

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