Aspects of Macroeconomic Policy Combinations and Their Effects on Financial Markets
This paper analyses the implications of macroeconomic policy interactions for financial stability, proxied by financial assets prices (equity and bonds). The empirical analysis applies a Vector Autoregressive (VAR) model and our findings suggest that an accommodating monetary, and disciplined fiscal, stance has been optimal for both stock and bond markets. There is also ample evidence of interdependence between policies, as an expansionary fiscal policy could persuade the monetary authorities to adopt an accommodating stance, whereas a contractionary monetary policy leads fiscal policy towards consolidation. The interrelation between monetary and fiscal policy necessitates coordination between them for the sake of financial stability.
Year of publication: |
2014
|
---|---|
Authors: | Nasir, Muhammad Ali ; Soliman, Alaa M. |
Published in: |
Economic Issues Journal Articles. - Nottingham Business School. - Vol. 19.2014, 1, p. 95-118
|
Publisher: |
Nottingham Business School |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Nasir, Muhammad Ali, (2016)
-
Nasir, Muhammad Ali, (2016)
-
Macroeconomic Policies Interaction & the Symmetry of Financial Markets’ Responses
Nasir, Muhammad Ali, (2016)
- More ...