Macroprudential Policies and Economic Growth

Andrieş, Alin Marius; Melnic, Florentina

doi:10.1515/rebs-2019-0084

Cited by 8 publications

(7 citation statements)

References 14 publications

(15 reference statements)

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“…Therefore, to tackle inequality among high-income earners, it is crucial to have policies and strategies in place that prioritize inclusive growth, ensuring that the benefits of economic development reach all segments of society, rather than focusing solely on GDP per capita as a measure of progress. Our results support the findings documented by Andries and Melnic [71].…”

Section: Regions (S) Pedroni Tests For Cointegrationsupporting

confidence: 94%

The Impact of US and UN Economic Sanctions on Income Inequality of the Target State: Evidence from a Bayesian Approach

Nobuhle Mkhwanazi,

Talent Zungu,

Kaseeram

2024

Business, Management and Economics

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This study examines the impact of US and UN economic sanctions on income inequality in African- and Asian-targeted states from 1980–2019, using the Bayesian Generalized Method of Moment’s (BGMM) technique. One essential weapon of international politics for promoting peaceful international cohabitation is the imposition of political and economic sanctions, despite ongoing debates on the effectiveness of punishments in generating disutility. The BGMM was chosen due to its ability to address the dynamics of several entities in the data. The study reveals a positive relationship between economic sanctions and income inequality, except for pre-tax income held by the top 10%, indicating a significant contribution to income inequality. The study further finds that African countries seem to suffer the most from the execution of these sanctions compared to Asian countries. From a policy perspective, the study suggests implementing targeted assistance programs such as financial support and job training programs for vulnerable groups, such as low-income workers and small businesses, affected by sanctions. Additionally, policymakers should prioritize investments in less-impacted sectors, creating alternative job opportunities, and reducing income disparities. This approach can mitigate the negative effects of economic sanctions on income inequality by addressing specific needs and diversifying the economy.

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Section: Regions (S) Pedroni Tests For Cointegrationsupporting

confidence: 94%

The Impact of US and UN Economic Sanctions on Income Inequality of the Target State: Evidence from a Bayesian Approach

Nobuhle Mkhwanazi,

Talent Zungu,

Kaseeram

2024

Business, Management and Economics

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“…The finding that macroprudential tightening can be pro-growth is intensely debated in the empirical literature. Against this backdrop, our result is consistent with the conclusions by Boar et al (2017) and by Andries and Melnic (2019), while contrasting with the findings by Belkhir et al (2020) and Madeira (2020). Yet, none of these studies assesses the effects of macroprudential policy on real economic activity from the global perspective, focusing on panel data.…”

Section: Baseline Resultssupporting

confidence: 74%

“…impact on real economic activity is neutral or even positive (Andries and Melnic 2019;Belkhir et al 2020;Boar et al 2017;Davis et al 2019;Kim and Mehrotra 2019;Madeira 2020;Richter et al 2019;Rojas et al 2020). In a cross-country framework, international spillovers of domestic macroprudential intervention should be measured properly, which would facilitate adequate policy coordination among involved countries (Kang et al 2017;Norring 2019).…”

mentioning

confidence: 99%

A global perspective on macroprudential policy interaction with systemic risk, real economic activity, and monetary intervention

2021

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The study empirically assesses how macroprudential policy interacts with systemic risk, industrial production, and monetary intervention on a global level from January 2006 to December 2018. We adopt the aggregate proxies of these variables, capturing their global effects, and use a novel econometric technique, namely, smooth local projections. The study finds that global macroprudential policy leads the monetary policy, exhibiting a countercyclical pattern concerning industrial production. The latter has an inverse bidirectional linkage with systemic risk. Thus, an ex-ante tight macroprudential policy can indirectly mitigate global systemic risk through its pro-growth effect on industrial production, although no convincing evidence exists for the direct impact of a macroprudential intervention on systemic risk. The study results endure several extensions and a robustness check, which builds on alternative measures of global systemic stress and real economic activity, thereby legitimizing the increased importance attached to the macroprudential policy since the 2007–2009 global financial crisis.

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“…This section will provide a quick overview of the literature on the impact of macroprudential policy on economic growth. In the literature, a negative impact of macroprudential policy on economic growth has been evidenced (Boar et al 2017;Kim and Mehrotra 2017;Alin and Florentina 2019;Belkhir et al 2022), while few have shown the positive effects (Andries and Melnic 2019). Boar et al (2017) documented that macroprudential policies are detrimental to growth in a panel of 64 developing and developed countries using the GMM.…”

Section: The Empirical Analysis Of Macroprudential Policies and Econo...mentioning

confidence: 99%

“…Boar et al (2017) and Kim and Mehrotra (2017) were further supported by Belkhir et al (2022), who studied the same subject matter during the banking crises in a panel of 134 countries, covering the time span 2000-2017, using the Early Warning System model. A contradiction emerged following the study by Andries and Melnic (2019) in a panel of 61 countries over the period 2000-2015, using System-GMM. Their findings support the premise that macroprudential interventions are good for growth.…”

Section: The Empirical Analysis Of Macroprudential Policies and Econo...mentioning

confidence: 99%

The Optimal Level of Financial Growth in View of a Nonlinear Macroprudential Policy Regime Model: A Bayesian Approach

Dlamini

Zungu

Nkomo

2023

JRFM

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A panel data analysis of nonlinear financial growth dynamics in a macroprudential policy regime was conducted on a panel of 10 African emerging countries from 1985–2021, where there had been a non-prudential regime from 1985–1999 and a prudential regime from 2000–2021. The paper explored the validity of the inverted U-shape hypothesis in the prudential policy regime as well as the threshold level at which excessive finance boosts growth using the Bayesian Spatial Lag Panel Smooth Transition Regression (BSPSTR) model. The BSPSTR model was adopted due to its ability to address the problems of endogeneity and heterogeneity in a nonlinear framework. Moreover, as the transition variable often varies across time and space, the effect of the independent variables can also be time- and space-varying. The results reveal evidence of a nonlinear effect between finance and growth, where the optimal level of financial development is found to be 92% of GDP, above which financial development decreases growth. The findings confirmed the Greenwood and Jovanovic hypothesis of an inverted U-shape relationship. Macroprudential policies were found to trigger the finance–growth relationship. The policy recommendation is that the financial sector should be given adequate consideration and recognition by, for example, implementing appropriate financial reforms, developing a suitable investment portfolio, and keeping spending on technological investment in Africa’s emerging countries below the threshold. Again, caution is needed when introducing macroprudential policies at a low level of the financial system.

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Macroprudential Policies and Economic Growth

Cited by 8 publications

References 14 publications

The Impact of US and UN Economic Sanctions on Income Inequality of the Target State: Evidence from a Bayesian Approach

The Impact of US and UN Economic Sanctions on Income Inequality of the Target State: Evidence from a Bayesian Approach

A global perspective on macroprudential policy interaction with systemic risk, real economic activity, and monetary intervention

The Optimal Level of Financial Growth in View of a Nonlinear Macroprudential Policy Regime Model: A Bayesian Approach

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