Financial Spillovers and Macroprudential Policies

Joshua Aizenman, Menzie D. Chinn, Hiro Ito

Research output: Contribution to journalArticlepeer-review

24 Scopus citations

Abstract

We estimate the impact of the extensity of macroprudential policies on the correlation of the policy interest rates between the center economies (CEs, i.e., the U.S., Japan, and the Euro area), and the peripheral economies (PHs). We find a more extensive implementation of macroprudential policies would lead PHs to (re)gain monetary independence from the CEs when the CEs implement expansionary monetary policy; when PHs run current account deficit; when they hold lower levels of international reserves; when their financial markets are relatively closed; when they are experiencing an increase in net portfolio flows; and when they are experiencing credit expansion.

Original languageEnglish
Pages (from-to)529-563
Number of pages35
JournalOpen Economies Review
Volume31
Issue number3
DOIs
StatePublished - 1 Jul 2020
Externally publishedYes

Keywords

  • Macroprudential policy
  • Spillover
  • Trilemma

ASJC Scopus subject areas

  • Economics and Econometrics

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