Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/230410 
Year of Publication: 
2018
Series/Report no.: 
Cardiff Economics Working Papers No. E2018/4
Publisher: 
Cardiff University, Cardiff Business School, Cardiff
Abstract: 
The paper takes the stand that the central banks as financial regulators have their own interest in imposing more regulations. It models the institutional behaviour for the central bank and government using the Indirect Inference testing and estimation method as it finds a set of coefficients of the model that can generate the actual observed behaviour for the US. The paper establishes that good monetary policy can reduce instability. Regulation at worse destabilises the economy and at best contributes little to stabilise the economy. After the financial crisis, financial regulations were too severe and thus actually increased instability.
Subjects: 
DSGE
Regulations
Financial Stability
Monetary Policy
JEL: 
E10
E58
G28
Document Type: 
Working Paper

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