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Evaluation of the methodological relationship between real business cycle model and macroprudential policy

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  • Ayşegül Ladin SÜMER

    (Independent Researcher, Turkey)

Abstract

While real business cycle model excluded nominal demand and monetary changes in proof of aggregate output fluctuations, the 2008 crisis proved otherwise. The systemic risk that emerged in this process affected the financial and real sector transmission mechanism towards a contraction. Macroprudential policy brought a solution to the problem, especially with banking loan activities. The aim of this study is to explain the methodological relationship between real business cycle model and macroprudential policy intervention based on the results of the 2008 crisis. In the study, the lack of information set limits the methodological relationship, including the duration of real economic shocks, the degree of interaction between the financial and real sector, and the magnitude of the credit cycle volatility.

Suggested Citation

  • Ayşegül Ladin SÜMER, 2021. "Evaluation of the methodological relationship between real business cycle model and macroprudential policy," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(628), A), pages 57-64, Autumn.
    • Handle: RePEc:agr:journl:v:3(628):y:2021:i:3(628):p:57-64
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    References listed on IDEAS

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