Lubis, AlexanderAlexiou, ConstantinosNellis, Joseph G.2021-08-042021-08-042021-07-22Lubis A, Alexiou C, Nellis JG. (2022) Monetary and macroprudential policies in the presence of external shocks: evidence from an emerging economy. Journal of Economic Studies, Volume 49, Number 6, 24 August 2022, pp. 960-9770144-3585https://doi.org/10.1108/JES-11-2020-0577http://dspace.lib.cranfield.ac.uk/handle/1826/16965Purpose This paper examines the impact of using the reserve requirements, combined with foreign exchange (FX) intervention, as key instruments in an inflation-targeting framework. Design/methodology/approach In the context of a dynamic stochastic general equilibrium (DSGE) framework and using Bayesian techniques, the authors estimate a model for the Indonesian economy using quarterly data spanning the period 2005Q2–2019Q4. Findings The reserve requirement is found to assume a complementary role to that of the interest rate policy and FX intervention when used to stabilise the macroeconomy. Originality/value This paper provides a benchmark for other emerging countries that consider adopting the inflation targeting framework and impose an FX intervention as part of their monetary policy.enAttribution-NonCommercial 4.0 Internationalhttp://creativecommons.org/licenses/by-nc/4.0/DSGEReserve requirementForeign exchange interventionMacroprudential policyMonetary policyArticle