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Macroprudential policies in a low interest-rate environment

Rubio, Margarita; Yao, Fang


Fang Yao


In this paper, we analyze the use of macroprudential policies in a low interest rate environment, where an occasionally binding zero lower bound (ZLB) constraint gives rise to aggregate demand externalities. We study this issue by using a dynamic stochastic general equilibrium (DSGE) model with financial frictions and a monetary policy rule that is subject to the ZLB. We find that, in a low interest rate environment, the occasionally binding ZLB creates additional scope for macroprudential intervention. When the interest rate is high and the two policies can perfectly coordinate, the optimal policy prescriptions behave as if they were independent. This is, however, no more the case, when the interest rate is low and/or when monetary policy and macroprudential policy cannot be perfectly coordinating. This more complex policy environment calls for more policy coordination.


Rubio, M., & Yao, F. (2020). Macroprudential policies in a low interest-rate environment. Journal of Money, Credit and Banking, 52(6), 1565-1591.

Journal Article Type Article
Acceptance Date Apr 22, 2019
Online Publication Date Oct 7, 2019
Publication Date 2020-09
Deposit Date Apr 24, 2019
Publicly Available Date Oct 8, 2021
Journal Journal of Money, Credit and Banking
Print ISSN 0022-2879
Electronic ISSN 1538-4616
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 52
Issue 6
Pages 1565-1591
Keywords Economics and Econometrics; Accounting; Finance
Public URL
Publisher URL
Additional Information This is the peer reviewed version of the following article: RUBIO, M. and YAO, F. (2019), Macroprudential Policies in a Low Interest Rate Environment. Journal of Money, Credit and Banking, which has been published in final form at This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions


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