Formation and effects of UK monetary and macroprudential policies

• Main Author: Lyu, Juyi
• Format: Dissertation
• Language: English
• Published: Cardiff University 2021

This thesis consists of two essays on two models: a DSGE (Dynamic stochastic general equilibrium) model and an institutional model. Essay I (Chapters 1 to 7) builds a macro-DSGE model for the UK over 1986-2016. Chapter 1 covers the background and review the literature; Chapter 2 outlines the model setup; chapter 3 tests and estimates the model; Chapter 4 looks at model's transmission mechanism. Chapter 5 develops a narrative for the UK economy over the sample period; Chapter 6 explores model's policy implications under alternative monetary regimes; and Chapter 7 concludes. Essay II (Chapters 8 to 12) is built upon the DSGE model set up in Essay I to investigate the behaviours of UK central bank and government. Chapter 8 provides theoretical background and motivation; Chapter 9 lays out assumptions and presents the strategic choices made by policy makers according to our model; Chapter 10 illustrates how, when combined with the macro-DSGE framework formalised in Essay I, the institutional model is able to conform qualitatively with the UK data over 1993-2016; Chapter 11 evaluates the stability under alternative monetary regimes; and Chapter 12 concludes and draws implications. Appendices for Essay I and II are labelled with A and B respectively.