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This paper analyzes real and welfare effects of a permanent change in inflation rate, focusing on macroprudential policy’ role and its interaction with monetary policy.

While investigating disinflation costs, the authors simulate a medium-scale dynamic general equilibrium model with borrowing constraints, credit frictions and macroprudential authority.

Providing discussions on different policy scenarios in a context where still it is expected high inflation, there are three key contributions. First, when macroprudential authority actively operates to improve financial stability, losses caused by disinflation are limited. Second, a Taylor rule directly responding to financial variables might entail a trade-off between price and financial stability objectives, by increasing disinflation costs. Third, disinflation is welfare improving for savers, while costly for borrowers and banks. Indeed, while savers benefit from policies reducing price stickiness distortion, borrowers are worried about credit frictions, coming from collateral constraint.

The paper suggests threefold policy implications: the macroprudential authority should actively intervene during a disinflation process to minimize costs and financial instability deriving from it; policymakers should implement a disinflationary policy stabilizing also output; the central bank and the macroprudential regulator should pursue financial and price stability goals, separately.

This paper is the first attempt to study effects of a permanent inflation target reduction in focusing on the macroprudential policy’ role.

This paper aims to examine the impacts of macroprudential policy on the shadow economy worldwide.

We compile a panel dataset covering 125 countries from 1990 to 2018. This paper mitigates potential endogeneity issues via two-stage least squares and the two-step generalized method of moments (GMM).

The robust results show that the overall tightening of macroprudential policies exerts an expansion impact on the shadow economy. Further examination of the 16 individual macroprudential policy instruments finds that loan restrictions, countercyclical buffers, surcharges for systemically important financial institutions and capital conservation buffers have positive and statistically significant effect on the shadow economy. This relationship is only present during tightening episodes of macroprudential policy as loosening episodes do not exhibit any significant impact. Finally, this paper documents the nonlinear effects of macroprudential policy.

The results suggest that the supervisory authorities may need to consider another parameter, which is the development of the shadow economy, when devising the optimal macroprudential policy responses.

To the best of the authors’ knowledge, this paper is likely the first to empirically document the impact of macroprudential policy on the shadow economy. It contributes to the growing literature on the potential side effects of macroprudential policy on the macro-economy.

This paper aims to investigate the effects of macroprudential policies in Brazil on the banking sector.

Autoregressive models with distributed lags (ADL) are estimated to verify whether such regulatory measures affected the volume of credit, the banking spread and the concentration index of the five largest Brazilian banks. In addition to the variables of interest, monthly macroeconomic data from 2011 to 2021 are considered.

Our results suggest that macroprudential policies are effective in reducing credit volume. More importantly, our findings highlight two possible adverse effects of these instruments. Firstly, macroprudential tightenings are associated with increases in bank spread. Secondly, tightening measures contribute to increasing bank market concentration.

These findings are useful for the scientific literature that investigates the regulation of the financial system by providing empirical evidence of the effects of Brazilian macroprudential measures on investors, policymakers and other economic agents whose well-being is associated with economic stability.

Empirical studies, to date, show that financial inclusion (FI) enhances financial stability (FS) by promoting a large deposit base, reducing information asymmetry, and strengthening market power on the one hand, and leads to financial fragility by expanding credit without proper screening, increasing operational costs, and provoking borrowers' moral hazard on the other. Thus, the most important issue is to maintain FS while extending formal financial services to the impoverished and disadvantaged segments of society. Therefore, this paper investigates the efficacy of macroprudential regulations (MPRs) to align these policy divergences.

To accomplish the objective and facilitate policy implications, the authors use aggregated and disaggregated measures of both FI and MPRs, employ advanced econometric models that minimize endogeneity and ensure robustness, and investigate their joint effectiveness in upholding FS using data of 138 countries spanning the 2004–2017 years.

The findings indicate that the effectiveness of MPRs is instrument specific. Some MPRs that obstruct access to formal financial services, in particular, moderate the advantage of FI in achieving FS, while others boost the effect of inclusion in attaining financial sector stability. Therefore, prudence should be emphasized while designing MPRs as a tool for aligning the policy trade-off between FI and FS.

To the best of the authors knowledge, this paper extends previous empirical research by investigating the conditioning impact of MPRs in the FI-FS nexus.

This study examines the importance of exchange rate and credit growth fluctuations when designing monetary policy in Thailand. To this end, the authors construct a small open economy New Keynesian dynamic stochastic general equilibrium (DSGE) model. The model encompasses several essential characteristics, including incomplete financial markets, incomplete exchange rate pass-through, deviations from the law of one price and a banking sector. The authors consider generalized Taylor rules, in which policymakers adjust policy rates in response to output, inflation, credit growth and exchange rate fluctuations. The marginal likelihoods are then employed to investigate whether the central bank responds to fluctuations in the exchange rate and credit growth.

This study constructs a small open economy DSGE model and then estimates the model using Bayesian methods.

The authors demonstrate that the monetary authority does target exchange rates, whereas there is no evidence in favor of incorporating credit growth into the policy rules. These findings survive various robustness checks. Furthermore, the authors demonstrate that domestic shocks contribute significantly to domestic business cycles. Although the terms of trade shock plays a minor role in business cycles, it explains the most significant proportion of exchange rate fluctuations, followed by the country risk premium shock.

This study is the first attempt at exploring the relevance of exchange rate and credit growth fluctuations when designing monetary policy in Thailand.

Evidence shows that African countries are confronted with high levels of income inequality. Therefore, it is relevant to approach and analyze the factors contributing to these severe inequality cases. This paper addresses the issue by focusing on the role of financial regulation and military spending.

We used a sample of 30 African countries and a recent period (2009–2020), employing various instrumental variable estimation techniques to control for endogeneity.

The results confirm that economic growth aggravates income inequality due to high corruption and political instability. Results confirm that the increase in military spending increases inequality and that financial regulation weakens financial inclusion and also increases income inequality.

The study shows the need for greater control of corruption and the promotion of political stability so that economic growth and financial inclusion can effectively reduce income inequality, as well as the need for a better balance in the drafting of financial regulations and the preparation of military expenditure to safeguard other policy objectives.

The present study contributes to scarce financial, economic, and social literature considering the role of financial regulation and military spending in the persistence of income inequality in African countries. Previous studies disregarded this fact.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-04-2023-0287

This study aims to investigate the effect of monetary policy transmission on the use-based classification of manufacturing industries in India, an integral aspect influencing the overall economic growth of the nation.

The empirical study applies a panel autoregressive distributed lag model to examine the relationship/association between monetary policy transmission mechanism and the output of manufacturing industries in the long run and short run.

In the long run, the findings reveal a negative association between money supply and manufacturing industries’ output, indicating that an increase in money supply corresponds to a decrease in manufacturing output. Conversely, a positive relationship is observed between manufacturing industries’ output and banks’ credit, indicating that an increase in bank credit leads to a corresponding increase in manufacturing output. In the short run, the results highlight a significant positive relationship between manufacturing output and monetary policy transmission variables, including money supply, statutory liquidity ratio, real exchange rate and foreign direct investment. The use-based classification of manufacturing industries such as primary goods, capital goods and intermediate goods exhibits greater responsiveness to monetary policy shocks than consumer durables and non-durables goods.

Policymakers are advised to regulate credit expansion to support the industry without risking financial instability, with key recommendations including stimulating consumer demand and adopting sector-specific policies to promote sustainable growth across diverse manufacturing sectors.

India, being a developing economy, efficient monetary policy transmission is crucial for boosting manufacturing output and employment. Nevertheless, there has been a scarcity of research concentrated on this pivotal intersection. This study aims to fill that gap, providing fresh insights into how monetary policy affects the growth of the manufacturing industry.

Making monetary policy decisions is a fine line to tread, always seeking to balance the needs of the domestic economic conditions with the need to keep events in the outside world under check. It is impossible to overstate the significance of monetary Trilemma in this context. This study aims to test the presence of monetary Trilemma and the contrasting dilemma hypothesis in India. The study is conducted over a considerable long span of time (1996–2022) to understand the evolution and changes in the management of Trilemma. In order to ascertain the changes in the existence of dilemma in India, this study analyses pre- and post-global financial crisis time periods. The relevance of exchange rate regimes in transforming Trilemma into a dilemma in the Indian context is assessed by providing for capital account restrictions. This evaluation helps to comprehend the impact of spillovers caused by monetary policy shocks in the United States and the resulting global financial cycle in India. The study provides evidence in favor of Trilemma and the relevance of exchange rate regimes as well as capital controls in determining monetary policy independence. The prevalence of more flexible exchange rate regimes favors a gradual shift toward dilemma, in situation of low capital controls.

This paper, based on the 2022 Master Class delivered at the 50th National Economic Meeting organized by ANPEC, discusses how post-Keynesian macroeconomics and New Developmentalism complement each other to understand middle-income economies' development in financial globalization. It summarizes my academic reflection about the advance in post-Keynesian thinking to develop macroeconomics for peripheral middle-income economies.

As part of this reflection, I first bring up the idea of a developmental convention and, next, how peripheral financialization impacts the elaboration of this convention. Given the asymmetric configuration of the international financial system and the context of hierarchical currencies, I discuss the challenge of overcoming underdevelopment in peripheral economies. The post-Keynesian macroeconomics and advances in the structuralist debate provide the analytical tools to understand how peripheral economies develop virtuous or vicious growth cycles. At the end of the paper, I present some comments on the stagnation of the Brazilian economy.

The growth strategy with foreign savings does not provide the conditions for middle-income economies to operate with sufficient economic policy autonomy to promote productive transformation. To this end, a developmental convention should replace the neoliberal convention that has dominated since the 1970s.

The dynamics of peripheral, middle-income economies, often influenced by international liquidity flows, are a crucial area of study. This research underscores the importance of understanding these dynamics, as it forms the basis for economic policy recommendations. The paper also highlights the inadequacy of the growth strategy with foreign savings in the current configuration of the international financial system, emphasizing the need for middle-income economies to operate with greater economic policy autonomy to foster productive transformation.

The concept of banking reputation has gained significant attention due to its relevance in the banking industry. A strong reputation has become crucial for a bank’s success, as it affects trust, credibility and stakeholders' perceptions. However, understanding and managing reputation in the banking sector involves several challenges. This study aims to analyze the field of banking reputation research through bibliometric analysis.

It explores the evolution of research in this area, identifies key journals, articles and authors, examines the main research streams, and identifies research fronts and opportunities for future advancement.

The findings reveal that banking reputation research has evolved over time, with multiple perspectives and viewpoints. Key journals and authors in the field are identified, and leading research streams are highlighted. The study also uncovers the conceptual and intellectual structure of the research domain, providing insights into the complex and multidimensional nature of banking reputation. Furthermore, the study emphasizes the importance of corporate social responsibility, sustainability practices and gender diversity in shaping a bank’s reputation. These factors play a significant role in attracting and retaining customers, accessing financial markets and securing funding.

The results contribute to the existing body of knowledge and provide researchers and practitioners with valuable insights for further exploration.

The paper concludes by outlining potential avenues for future research in the field of banking reputation.