ABSTRACT
In this chapter the main macro-financial linkages in the Polish economy are presented. The dynamics of these linkages are fundamental in the conduct of macroprudential policy. Vector autoregressive models are widely used in this context. Both linear and non-linear models are used to capture the complex dynamics of the interactions between the financial market and macroeconomy. The effects are assessed with impulse response functions. Policy recommendations for both monetary and macroprudential policies are proposed within the context of optimal capital requirements for sustained economic growth
