Assessing macroprudential regulation: the role of the zero lower bound

ABSTRACT

We look at the interaction between the zero lower bound (ZLB) and flexible macroprudential regulation (FMR). After an adverse demand shock, FMR contributes to financial stability irrespective of the ZLB and also to macroeconomic stabilization if the ZLB binds.

KEYWORDS:

• (Flexible) macroprudential regulation
• zero lower bound
• financial stability

JEL CLASSIFICATION:

• E44
• E32
• G21
• G28
• E52

Disclosure statement

No potential conflict of interest was reported by the authors.