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Central bank independence and macro-prudential regulation

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  • Ueda, Kenichi
  • Valencia, Fabián

Abstract

When a central bank is in charge of both price and financial stability, a new time-inconsistency problem may arise. Monetary policy may be abused to reduce the private sector’s real debt burden after a financial shock materializes.

Suggested Citation

  • Ueda, Kenichi & Valencia, Fabián, 2014. "Central bank independence and macro-prudential regulation," Economics Letters, Elsevier, vol. 125(2), pages 327-330.
    • Handle: RePEc:eee:ecolet:v:125:y:2014:i:2:p:327-330
    DOI: 10.1016/j.econlet.2013.12.038
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    19. Gianni De Nicolo & Giovanni Favara & Lev Ratnovski, 2012. "Externalities and Macroprudential Policy," IMF Staff Discussion Notes 12/05, International Monetary Fund.
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    More about this item

    Keywords

    Monetary policy; Macro-prudential regulation; Central bank independence; Time-inconsistency;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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