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Get ready for the Fed lift-off: The role of macroprudential policy

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  • F. Gulcin Ozkan
  • D. Filiz Unsal

Abstract

This paper explores how best a small open economy can defend against a foreign interest rate rise, such as the impending Fed lift-off. We find that a broad based macroprudential policy is the mosteffective tool in containing fluctuations arising from the interest rate shock, hence yielding the lowest loss in welfare.

Suggested Citation

  • F. Gulcin Ozkan & D. Filiz Unsal, 2015. "Get ready for the Fed lift-off: The role of macroprudential policy," Discussion Papers 15/25, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:15/25
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    More about this item

    Keywords

    Foreign interest rates; emerging markets; monetary pol-icy; macroprudential measures; capital controls.;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • G1 - Financial Economics - - General Financial Markets

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