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The Central Bank of the Republic of Turkey is organizing the 2013 Central Bank Macroeconomic Modeling Workshop (CBMMW) on the topic “Understanding the Mechanisms and Effects of New Policy Instruments”.
Incorporating financial stability as a supplementary objective for monetary policy in central banks is enjoying an increasing interest fueled by the recent global financial crisis. To this end, many central banks have adopted macro-prudential policies and liquidity operations in addition to the traditional interest rate instrument. This practice, however, is not yet firmly grounded in theoretical macroeconomic models, which raises a number of questions:
- How to model and conduct optimal policy in an environment imposing a coordination of many instruments?
- What are the transmission mechanisms and expected effects of macro-prudential policies?
- What are or should be the interactions between the current instruments of monetary policy, namely (i) reserve requirements, (ii) liquidity operations, in addition to (iii) the short-term interest rate?
- What is the optimal response to global cycles in macro-financial risks to liquidity and solvency?
- What types of tools can be devised in order to contain risks to financial stability?
- Modeling issues related to emerging economies such as optimal policy against capital flow volatility.
The two-day workshop taking place in Istanbul on November 7-8, 2013 will bring together leading economists from central banks, international institutions and academic institutions to consider critical issues related to the adoption of new policy instruments in central banks.