Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/217629 
Year of Publication: 
2017
Citation: 
[Journal:] Journal of Central Banking Theory and Practice [ISSN:] 2336-9205 [Volume:] 6 [Issue:] 3 [Publisher:] De Gruyter Open [Place:] Warsaw [Year:] 2017 [Pages:] 95-126
Publisher: 
De Gruyter Open, Warsaw
Abstract: 
This study has analysed the implications of institutional design of macroeconomic policy making institutions for the macroeconomic policy interaction and financial sector in the United Kingdom. Employing a Vector Error Correction (VEC) model and using monthly data from January 1985 to August 2008 we found that the changes in institutional arrangement and design of policy making authorities appeared to be a major contributing factor in dynamics of association between policy coordination/combination and financial sector. It was also found that the independence of the Bank of England (BoE) and withdrawal from the Exchange Rate Mechanism led to the increase in macroeconomic policy maker’s ability to coordinate and restore financial stability. The results imply that although institutional autonomy in the form of instrument independence (monetary policy decisions) could bring financial stability, there is a strong necessity for coordination, even in Post-MPC (Monetary Policy Committee) and the BoE independence.
Subjects: 
Macroeconomic Policy Interaction
Institutional Design
Financial Markets
Policy Coordination
Central Bank Independence.
JEL: 
E52
E58
E44
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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