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Macroprudential policy in Asia

Author

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  • Kim, Jihae
  • Kim, Soyoung
  • Mehrotra, Aaron
Abstract
This paper analyses the conduct and the effects of macroprudential policy in 11 Asian economies, some of which used macroprudential instruments frequently already before the Great Financial Crisis. Data are quarterly for the period 2000–2014. The frequency of macroprudential measures has generally increased after the crisis, and policies are generally tightened during the upswing of a bank credit cycle. Estimates from panel vector autoregression models show that contractionary macroprudential policy shocks have negative effects on credit and output that are qualitatively similar to those of monetary policy. The results suggest that policy conflicts when credit growth is strong and the real economy is weak may be resolved through complementary use of macroprudential and monetary policy instruments.

Suggested Citation

  • Kim, Jihae & Kim, Soyoung & Mehrotra, Aaron, 2019. "Macroprudential policy in Asia," Journal of Asian Economics, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:asieco:v:65:y:2019:i:c:s1049007818303464
    DOI: 10.1016/j.asieco.2019.101149
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    References listed on IDEAS

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    Cited by:

    1. Nakatani, Ryota, 2020. "Macroprudential policy and the probability of a banking crisis," Journal of Policy Modeling, Elsevier, vol. 42(6), pages 1169-1186.
    2. Chokri Zehri & Zagros Madjd‐Sadjadi, 2024. "Capital flow management and monetary policy to control credit growth," Economics and Politics, Wiley Blackwell, vol. 36(2), pages 637-676, July.
    3. Eller, Markus & Hauzenberger, Niko & Huber, Florian & Schuberth, Helene & Vashold, Lukas, 2021. "The impact of macroprudential policies on capital flows in CESEE," Journal of International Money and Finance, Elsevier, vol. 119(C).
    4. Kim, Soyoung & Shim, Seri & Chen, Hongyi, 2023. "Effects and Conduct of Macroprudential Policy in China," Journal of Financial Stability, Elsevier, vol. 66(C).
    5. Marek A. Dąbrowski & Dimas Mukhlas Widiantoro, 2023. "Effectiveness and conduct of macroprudential policy in Indonesia in 2003–2020: Evidence from the structural VAR models," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 13(3), pages 703-731, December.
    6. Wong, Siu Kei & Cheung, Ka Shing & Deng, Kuang Kuang & Chau, Kwong Wing, 2021. "Policy responses to an overheated housing market: Credit tightening versus transaction taxes," Journal of Asian Economics, Elsevier, vol. 75(C).
    7. Nuwat Nookhwun & Rawipha Waiyawatjakorn, 2024. "Flexible Inflation Targeting and Macroeconomic Performance: Evidence from ASEAN," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(2), pages 198-219, July.

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    More about this item

    Keywords

    VAR; Monetary policy; Macroprudential policy; Asia;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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