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Does monetary policy reinforce the effects of macroprudential policy?

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  • Livorová, Barbara
  • Geršl, Adam

Abstract

This article contributes to the research on the interaction between monetary and macroprudential policies by examining whether the impact of macroprudential policy on credit and house price growth differs between cycles of monetary policy tightening and loosening. The dataset covers 32 advanced and 31 emerging market countries over the period 2000–2019 on a quarterly basis. Using GMM estimations, the results show that the tightening of monetary policy does, on average, reinforce the effects of macroprudential policy on credit and house prices. Furthermore, this reinforcing effect works for some but not all types of macroprudential policy measures, and the results differ between advanced countries and emerging markets. The reinforcing effect works for periods of monetary tightening rather than monetary easing. For credit growth, the effect was found to be significant for both advanced and emerging market economies, whereas for house price growth the effect was significant only in advanced economies.

Suggested Citation

  • Livorová, Barbara & Geršl, Adam, 2026. "Does monetary policy reinforce the effects of macroprudential policy?," Economic Systems, Elsevier, vol. 50(1).
    • Handle: RePEc:eee:ecosys:v:50:y:2026:i:1:s0939362525000494
    DOI: 10.1016/j.ecosys.2025.101337
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    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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