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The impact of macroprudential policies on industrial growth

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  • Carlos Madeira

Abstract

This paper analyzes the causal impact of macroprudential policies on growth, using industry-level data for 93 countries in order to overcome reverse-causality issues. I find that macroprudential tightenings have a negative impact on manufacturing growth, especially in the long-term and for industries with high external finance dependence. This impact is stronger in periods of higher growth and for advanced economies. However, macroprudential tightenings, especially capital supply measures, also contribute to a reduction in the long-term growth volatility, with a larger impact in financially dependent industries. The policy trade-off between higher growth and lower volatility is substantial, especially for advanced economies

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  • Carlos Madeira, 2020. "The impact of macroprudential policies on industrial growth," Working Papers Central Bank of Chile 867, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:867
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    Cited by:

    1. Henry Penikas, 2021. "Review of Bank of Russia – NES Workshop 'Identification and Measurement of Macroprudential Policies Effects'," Russian Journal of Money and Finance, Bank of Russia, vol. 80(3), pages 94-104, September.
    2. Carlos Madeira, 2023. "The evolution of macroprudential policy use in Chile, Latin America and the OECD," Journal of Banking Regulation, Palgrave Macmillan, vol. 24(3), pages 357-380, September.
    3. Madeira, Carlos, 2024. "The impact of macroprudential policies on industrial growth," Journal of International Money and Finance, Elsevier, vol. 145(C).
    4. Mikhail I. Stolbov & Maria A. Shchepeleva & Alexander M. Karminsky, 2021. "A global perspective on macroprudential policy interaction with systemic risk, real economic activity, and monetary intervention," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-25, December.

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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