Financial stability, wealth effects and optimal macroeconomic policy combination in the United Kingdom: A new-Keynesian dynamic stochastic general equilibrium framework

Cogent Economics & Finance

Milton Yago¹  Alaa M. Soliman¹  Muhammad Ali Nasir¹  Junjie Wu¹ 

[1] Leeds Beckett University;

关键词: optimal policy;    financial markets;    wealth effects;    bayesian estimation;    nk-dsge model;   

DOI  :  10.1080/23322039.2015.1136098

来源: DOAJ

【 摘 要 】

This study derives an optimal macroeconomic policy combination for financial sector stability in the United Kingdom by employing a New Keynesian Dynamic Stochastic General Equilibrium (NK-DSGE) framework. The empirical results obtained show that disciplined fiscal and accommodative monetary policies stance is optimal for financial sector stability. Furthermore, fiscal indiscipline countered by contractionary monetary stance adversely affects financial sector stability. Financial markets, e.g. stocks and Gilts show a short-term asymmetric response to macroeconomic policy interaction and to each other. The asymmetry is a reflection of portfolio adjustment. However in the long-run, the responses to suggested optimal policy combination had homogenous effects and there was evidence of co-movement in the stock and Gilt markets.

【 授权许可】

Unknown