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The Interaction of Monetary and Macroprudential Policies in the Pursuit of the Central Bank's Primary Objectives

In: CNB Financial Stability Report 2014/2015

Author

Listed:
  • Jan Frait
  • Simona Malovana
  • Vladimir Tomsik

Abstract

This article is concerned with the interaction of monetary and macroprudential policies at different stages of the financial and business cycle. We focus on identifying related channels of transmission of the two policies and potential feedback between them. Our methodology allows us to obtain information from large number of variables and thus provides a comprehensive picture of the potential impacts of a monetary easing and a macroprudential tightening. The analysis reveals that in some situations monetary policy and macroprudential policy can come into conflict in the pursuit of their objectives. It is therefore crucial to coordinate them and seek an optimal policy mix based on a detailed assessment of the economic outlook.

Suggested Citation

  • Jan Frait & Simona Malovana & Vladimir Tomsik, 2015. "The Interaction of Monetary and Macroprudential Policies in the Pursuit of the Central Bank's Primary Objectives," Occasional Publications - Chapters in Edited Volumes, in: CNB Financial Stability Report 2014/2015, chapter 0, pages 110-120, Czech National Bank.
    • Handle: RePEc:cnb:ocpubc:fsr1415/1
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    References listed on IDEAS

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    10. repec:ulb:ulbeco:2013/13388 is not listed on IDEAS
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    1. repec:cnb:ocpubv:as18 is not listed on IDEAS
    2. Jiří Schwarz & Martin Pospíšil, 2018. "Bankruptcy, Investment, and Financial Constraints: Evidence from the Czech Republic," Eastern European Economics, Taylor & Francis Journals, vol. 56(2), pages 99-121, March.
    3. Malovaná, Simona & Frait, Jan, 2017. "Monetary policy and macroprudential policy: Rivals or teammates?," Journal of Financial Stability, Elsevier, vol. 32(C), pages 1-16.

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