Macroprudentials : separate from monetary policy or part of it?
Author(s)
Advisor
Böke, Selin SayekDate
2012Publisher
Bilkent University
Language
English
Type
ThesisItem Usage Stats
173
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Abstract
The structure of central bank in bank supervision is an important issue on
which there is not much focus whereas the independence of central banks
for the implementation of monetary policy is well investigated. Recently,
especially after the financial crisis, there is an increasing attention from policy
makers and academicians about financial regulation and monetary policy
responsibility issue. Since the crisis turned to have severe macroeconomic
consequences, the financial supervision issue is taken into consideration to revise.
In this paper, first I briefly explain the policy objectives of both macroand
microprudential regulations. Then, I use a dynamic stochastic general
equilibrium model which include separated and integrated responsibilities of
financial stability and monetary policy. As macroprudential policy tool, time
varying capital requirement ratio is used. Under a DSGE framework, it is
hard to see the separation of regulators, however the analyses is done in
terms of tools. The results imply that incorporating the central bank into
financial stability considerations can help smooth business cycle fluctuations,
and decreases the loss resulting from variances of main indicators.