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Macroprudential policies and current account balance

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  • Ekinci, Mehmet Fatih
  • Özcan, Gülserim

Abstract

Macroprudential policies have become essential tools for policymakers to maintain financial stability. We investigate the impact of macroprudential policies on the current account balance, considering the link between external imbalances and financial stability. Building on a panel VAR model, we further document that usage of a macroprudential instrument is associated with an improvement in the current account balance. Our findings suggest that the positive impact of macroprudential policy measures on the current account balance is more substantial in the deficit countries.

Suggested Citation

  • Ekinci, Mehmet Fatih & Özcan, Gülserim, 2022. "Macroprudential policies and current account balance," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 768-777.
    • Handle: RePEc:eee:ecanpo:v:73:y:2022:i:c:p:768-777
    DOI: 10.1016/j.eap.2022.01.003
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    More about this item

    Keywords

    Global imbalances; Current account balance; Macroprudential policies; Panel VAR;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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