Research On The Coordination Of Monetary Policy And Macro-prudential Policy

The US financial crisis that broke out in 2007-2008 quickly spread to the whole world,the seemingly stable and huge financial institutions collapsed in an instant.Since then,the macro-prudential supervision aimed at preventing and controlling systemic financial risks has received unprecedented attention.At present,our country's financial system such as local government,real estate market and shadow banking has accumulated a lot of risks.Therefore,at the 19 th National Congress of the Communist Party of China,it proposed to improve the dual-pillar regulation framework of monetary policy and macro-prudential policy.However,monetary policy and macro-prudential policy have different objectives,operational tools and emphasis.Although they can promote each other to a certain extent,there are still some conflicts.And in the existing research,there is no unified coordination mechanism between them.Accordingly,it's extremely meaningful to study how to realize the coordination of them,avoid the conflicts of policy effects,achieve the best balance between the stable growth and anti-risk.Firstly,this paper clarifies the objectives,tools,and transmission mechanisms of monetary policy and macro-prudential policy.Secondly,from the perspective of their differences and connections,it theoretically explores why these two policies need to be coordinated and how to achieve coordination.Finally,based on the reality of our country and existing researches,this paper constructs a DSGE model consisting of six economies: household,final product manufacturer,intermediate product manufacturer,capital goods manufacturer,entrepreneur and bank.Through the theoretical analysis and numerical simulation,we can draw the following conclusions:(1)When faced with positive shocks of technology,the introduction of macro-prudential policies can't significantly increase the total output and investment level,but can effectively control the excessive asset price and tend to be steady at a faster speed.Among them,and the macro-prudential policy targeting total output and asset price is liabler to conflict with monetary policy.(2)When faced with positive shocks of interest rate,there is no significant difference between the three models in terms of output,investment and inflation.Instead,adding macro-prudential policies isn't conducive to steady-state convergence.However,it is conducive to alleviating the decline of asset prices and converging to steady-state values at a faster rate.Similarly,the macro-prudential policy targeting total output and asset price is liabler to increases the fluctuations of variables to some extent.(3)When faced with positive shocks of LTV,the output,investment,inflation and asset price all show positive changes.Indicating that its transmission mechanism can still play its role after combining monetary policy.Among the two rules,the macro-prudential policies targeting asset price and total output is more powerful.Based on the above conclusions,we put forward four relevant suggestions:(1)coordinating the intensity and timing of policy implementation based on the economic and financial cycle and the type of impact;(2)optimizing policy transmission channels;(3)formulating the macro-prudential policy with single-objective rules;(4)improving information communication and sharing mechanism.