Assessing the Effects of Macroprudential Policy on the Indian Macroeconomy

This study examines the impact of macroprudential policy (MaPP) on macroeconomic conditions. Using data from 2004-2005 to 2019-2020, this study finds that increased use of MaPP is associated with higher consumption and economic growth. However, this study does not find a significant effect on inflation. From a threshold perspective, the study reveals that MaPP has a positive impact on consumption and economic growth up to a threshold level of 34.00; however, above this level, MaPP has a negative impact on both variables. Similarly, MaPP has a positive impact on inflation rates below the threshold level but has a negative impact above it. From a tail risk perspective, MaPP has a positive impact on the bottom quantile of economic growth.