Return to site

Financial structure and macroeconomic stability Research Paper

broken image

Financial structure and macroeconomic stability - Research Paper Example
 http://college-essay409.mystrikingly.com/ However the ability of the policy makers and financial regulators to implement different rules depends upon the control they have upon reducing inflation and output volatility. The transmission of interest rate fluctuations to output levels and prices depends upon a country’s policies regarding banking and management of financial markets. For most policy makers, in majority of the nations, controlling the interest rates in the short run is considered to be most important. Policy development and interest rate changes are however effective only when they lead to an increase the level finance available to firms and individuals who are willing to invest in projects or shift consumption. In many nations it is observed that the banking system is guarded from the impact caused by monetary policies through barriers which are created by the government (Iakova & Wagner, 2001).