IDEAS home Printed from https://ideas.repec.org/a/nzb/nzbbul/jun201405.html
   My bibliography  Save this article

The interaction between monetary and macro-prudential policy

Author

Listed:

Abstract

The Reserve Bank has recently developed a macro-prudential policy toolkit. This article considers how macro-prudential policy could interact with the Reserve Bank’s monetary policy function. While these policies are set with the differing objectives of financial and price stability, respectively, there is the potential for material spill-overs between them. Preliminary conclusions about how they should be set in conjunction with each other are discussed, touching on the interactions between the speed limit on high loan-to-value ratio (LVR) lending and monetary policy.

Suggested Citation

  • Ashley Dunstan, 2014. "The interaction between monetary and macro-prudential policy," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 77, pages 15-25, June.
  • Handle: RePEc:nzb:nzbbul:jun2014:05
    as

    Download full text from publisher

    File URL: http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/2014/2014jun77-2dunstan.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Enzo Cassino & Zoe Wallis, 2010. "The New Zealand dollar through the global financial crisis," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 73, pages 20-30, September.
    2. Michelle Lewis & Lauren Rosborough, 2013. "What in the world moves New Zealand bond yields?," Reserve Bank of New Zealand Analytical Notes series AN2013/08, Reserve Bank of New Zealand.
    3. Borio, Claudio & Zhu, Haibin, 2012. "Capital regulation, risk-taking and monetary policy: A missing link in the transmission mechanism?," Journal of Financial Stability, Elsevier, vol. 8(4), pages 236-251.
    4. Tim Aldridge & Amy Wood, 2014. "Monetary policy decision-making and accountability structures: some cross-country comparisons," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 77, pages 15-30, March.
    5. Bianca De Paoli & Matthias Paustian, 2013. "Coordinating monetary and macroprudential policies," Staff Reports 653, Federal Reserve Bank of New York.
    6. Mathias Drehmann & Mikael Juselius, 2012. "Do debt service costs affect macroeconomic and financial stability?," BIS Quarterly Review, Bank for International Settlements, September.
    7. Ross Kendall & Tim Ng, 2013. "The 2012 Policy Targets Agreement: an evolution in flexible inflation targeting in New Zealand," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 76, pages 3-12, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Günes Kamber & Özer Karagedikli & Christie Smith, 2015. "Applying an Inflation-Targeting Lens to Macroprodential Policy "Institutions"," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 395-429, September.
    2. Adam Cagliarini & Fiona Price, 2017. "Exploring the Link between the Macroeconomic and Financial Cycles," RBA Annual Conference Volume (Discontinued), in: Jonathan Hambur & John Simon (ed.),Monetary Policy and Financial Stability in a World of Low Interest Rates, Reserve Bank of Australia.
    3. David Hargreaves, 2016. "The macroprudential policy framework in New Zealand," BIS Papers chapters, in: Bank for International Settlements (ed.), Macroprudential policy, volume 86, pages 141-146, Bank for International Settlements.
    4. Ioanna Kokores, 2015. "Lean-Against-the-Wind Monetary Policy: The Post-Crisis Shift in the Literature," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 65(3-4), pages 66-99, july-Dece.
    5. John McDermott & Rebecca Williams, 2018. "Inflation Targeting in New Zealand: An Experience in Evolution," RBA Annual Conference Volume (Discontinued), in: John Simon & Maxwell Sutton (ed.),Central Bank Frameworks: Evolution or Revolution?, Reserve Bank of Australia.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gabriele Galati & Richhild Moessner, 2018. "What Do We Know About the Effects of Macroprudential Policy?," Economica, London School of Economics and Political Science, vol. 85(340), pages 735-770, October.
    2. Stijn Claessens & M Ayhan Kose, 2018. "Frontiers of macrofinancial linkages," BIS Papers, Bank for International Settlements, number 95, June.
    3. Palek, Jakob & Schwanebeck, Benjamin, 2019. "Optimal monetary and macroprudential policy in a currency union," Journal of International Money and Finance, Elsevier, vol. 93(C), pages 167-186.
    4. Gelain, Paolo & Ilbas, Pelin, 2017. "Monetary and macroprudential policies in an estimated model with financial intermediation," Journal of Economic Dynamics and Control, Elsevier, vol. 78(C), pages 164-189.
    5. Soyoung Kim & Aaron Mehrotra, 2015. "Managing price and financial stability objectives - what can we learn from the Asia-Pacific region?," BIS Working Papers 533, Bank for International Settlements.
    6. Nikolay Hristov & Markus Roth, 2019. "Uncertainty Shocks and Financial Crisis Indicators," CESifo Working Paper Series 7839, CESifo.
    7. Kroencke, Tim & Schmeling, Maik & Schrimpf, Andreas, 2019. "The FOMC Risk Shift," CEPR Discussion Papers 14037, C.E.P.R. Discussion Papers.
    8. Douglas Sutherland & Peter Hoeller & Balázs Égert & Oliver Röhn, 2010. "Counter-cyclical Economic Policy," OECD Economics Department Working Papers 760, OECD Publishing.
    9. Alejandro Torres-García & Carlos A. Ballesteros-Ruiz & Alfredo Villca-Condori, 2020. "Bank procyclicality, business cycles and capital requirements," Journal of Banking Regulation, Palgrave Macmillan, vol. 21(2), pages 152-169, June.
    10. Carlos González-Aguado, 2011. "Interest Rates and Credit Risk," CNMV Working Papers CNMV Working Papers no. 4, CNMV- Spanish Securities Markets Commission - Research and Statistics Department.
    11. Patrick A. Imam, 2015. "Shock from Graying: Is the Demographic Shift Weakening Monetary Policy Effectiveness," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 20(2), pages 138-154, March.
    12. Wang, Li & Menkhoff, Lukas & Schröder, Michael & Xu, Xian, 2019. "Politicians’ promotion incentives and bank risk exposure in China," Journal of Banking & Finance, Elsevier, vol. 99(C), pages 63-94.
    13. Benjamin Born & Michael Ehrmann & Marcel Fratzscher, 2011. "How Should Central Banks Deal with a Financial Stability Objective? The Evolving Role of Communication as a Policy Instrument," Chapters, in: Sylvester Eijffinger & Donato Masciandaro (ed.), Handbook of Central Banking, Financial Regulation and Supervision, chapter 9, Edward Elgar Publishing.
    14. Nkwoma John Inekwe, 2016. "Financial uncertainty, risk aversion and monetary policy," Empirical Economics, Springer, vol. 51(3), pages 939-961, November.
    15. Prabheesh, K.P. & Anglingkusumo, Reza & Juhro, Solikin M., 2021. "The dynamics of global financial cycle and domestic economic cycles: Evidence from India and Indonesia," Economic Modelling, Elsevier, vol. 94(C), pages 831-842.
    16. Carlos Arteta & M. Ayhan Kose & Franziska Ohnsorge & Marc Stocke, 2015. "The Coming U.S. Interest Rate Tightening Cycle: Smooth Sailing or Stormy Waters?," Koç University-TUSIAD Economic Research Forum Working Papers 1522, Koc University-TUSIAD Economic Research Forum.
    17. Morana, Claudio, 2014. "Insights on the global macro-finance interface: Structural sources of risk factor fluctuations and the cross-section of expected stock returns," Journal of Empirical Finance, Elsevier, vol. 29(C), pages 64-79.
    18. Chen, Minghua & Wu, Ji & Jeon, Bang Nam & Wang, Rui, 2017. "Do foreign banks take more risk? Evidence from emerging economies," Journal of Banking & Finance, Elsevier, vol. 82(C), pages 20-39.
    19. Angela Abbate & Dominik Thaler, 2019. "Monetary Policy and the Asset Risk‐Taking Channel," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(8), pages 2115-2144, December.
    20. Hans Genberg & Michael Zamorski, 2015. "Implementing Macroprudential Policies: Challenges, Pitfalls and Way Forward," Working Papers wp09, South East Asian Central Banks (SEACEN) Research and Training Centre.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nzb:nzbbul:jun2014:05. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Reserve Bank of New Zealand Knowledge Centre). General contact details of provider: https://edirc.repec.org/data/rbngvnz.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.