Effects Of Monetary And Macroprudential Policies On Financial Conditions
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Effects Of Monetary And Macroprudential Policies On Financial Conditions
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Author : Ms.Aleksandra Zdzienicka
language : en
Publisher: International Monetary Fund
Release Date : 2015-12-31
Effects Of Monetary And Macroprudential Policies On Financial Conditions written by Ms.Aleksandra Zdzienicka and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-12-31 with Business & Economics categories.
The Global Financial Crisis has reopened discussions on the role of the monetary policy in preserving financial stability. Determining whether monetary policy affects financial variables domestically—especially compared to the effects of macroprudential policies— and across borders, is crucial in this context. This paper looks into these issues using U.S. exogenous monetary policy shocks and macroprudential policy measures. Estimates indicate that monetary policy shocks have significant and persistent effects on financial conditions and can attenuate long-term financial instability. In contrast, the impact of macroprudential policy measures is generally more immediate but shorter-lasting. Also, while an exogenous increase in U.S. monetary policy rates tends to reduce credit and house prices in other countries—with the effects varying with country-specific characteristics—an increase driven by improved U.S. economic conditions tends to have the opposite effect. Finally, we do not find evidence of cross-border spillover effects associated with U.S. macroprudential policies.
Effects Of Monetary And Macroprudential Policies On Financial Conditions
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Author : Aleksandra Zdzienicka (Ms)
language : en
Publisher:
Release Date : 2015
Effects Of Monetary And Macroprudential Policies On Financial Conditions written by Aleksandra Zdzienicka (Ms) and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
Will Macroprudential Policy Counteract Monetary Policy S Effects On Financial Stability
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Author : Mr.Itai Agur
language : en
Publisher: International Monetary Fund
Release Date : 2015-12-29
Will Macroprudential Policy Counteract Monetary Policy S Effects On Financial Stability written by Mr.Itai Agur and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-12-29 with Business & Economics categories.
How does monetary policy impact upon macroprudential regulation? This paper models monetary policy's transmission to bank risk taking, and its interaction with a regulator's optimization problem. The regulator uses its macroprudential tool, a leverage ratio, to maintain financial stability, while taking account of the impact on credit provision. A change in the monetary policy rate tilts the regulator's entire trade-off. We show that the regulator allows interest rate changes to partly "pass through" to bank soundness by not neutralizing the risk-taking channel of monetary policy. Thus, monetary policy affects financial stability, even in the presence of macroprudential regulation.
Imf Research Bulletin March 2016
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Author : International Monetary Fund. Research Dept.
language : en
Publisher: International Monetary Fund
Release Date : 2016-04-06
Imf Research Bulletin March 2016 written by International Monetary Fund. Research Dept. and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-04-06 with Business & Economics categories.
The IMF Research Bulletin includes listings of recent IMF Working Papers and Staff Discussion Notes. The research summaries in this issue are “Explaining the Recent Slump in Investment” (Mathieu Bussiere, Laurent Ferrara, and Juliana Milovich) and “The Quest for Stability in the Housing Markets” (Hites Ahir). The Q&A column reviews “Seven Questions on Estimating Monetary Transmission Mechanism in Low-Income Countries” (Bin Grace Li, Christopher Adam, and Andrew Berg). Also included in this issue are updates on the IMF’s official journal, the IMF Economic Review, and recommended readings from IMF Publications.
Macroprudential Policy Effects
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Author : Nina Biljanovska
language : en
Publisher: International Monetary Fund
Release Date : 2023-03-31
Macroprudential Policy Effects written by Nina Biljanovska and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-03-31 with Business & Economics categories.
The global financial crisis (GFC) underscored the need for additional policy tools to safeguard financial stability and ultimately macroeconomic stability. Systemic financial vulnerabilities had developed under a seemingly tranquil macroeconomic surface of low inflation and small output gaps. This challenged the precrisis view that achieving these traditional policy targets was a sufficient condition for macroeconomic stability. Thus, new tools had to be deployed to target specific financial vulnerabilities and to build buffers to cushion adverse aggregate shocks, while allowing traditional policy levers, including monetary and microprudential policies to focus on their traditional roles. Macroprudential policy measures emerged as the solution to this gap. Some of these measures had been used before the GFC (mostly in emerging markets). But it was only after the crisis that they were more widely adopted, and the toolkit expanded. This spurred a growing body of empirical research on the effects and potential shortfalls of these measures, with a further deepening of this knowledge gaining importance as policymakers confront increased financial stability risks in the post-pandemic world. Recognizing that there still is much to learn, this paper takes stock of our expanding understanding about the effects (and side effects) of macroprudential measures by focusing on these questions: What have we learned about the effects of macroprudential policy in containing the buildup of vulnerabilities? What do we know about the effects on economic activity and resilience? How do policy effects vary with conditions and over time? How important are leakages and circumvention? How do the effects on credit depend on other policies?
An Overview Of Macroprudential Policy Tools
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Author : Mr.Stijn Claessens
language : en
Publisher: International Monetary Fund
Release Date : 2014-12-11
An Overview Of Macroprudential Policy Tools written by Mr.Stijn Claessens and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-12-11 with Business & Economics categories.
Macroprudential policies – caps on loan to value ratios, limits on credit growth and other balance sheets restrictions, (countercyclical) capital and reserve requirements and surcharges, and Pigouvian levies – have become part of the policy paradigm in emerging markets and advanced countries alike. But knowledge is still limited on these tools. Macroprudential policies ought to be motivated by market failures and externalities, but these can be hard to identify. They can also interact with various other policies, such as monetary and microprudential, raising coordination issues. Some countries, especially emerging markets, have used these tools and analyses suggest that some can reduce procyclicality and crisis risks. Yet, much remains to be studied, including tools’ costs ? by adversely affecting resource allocations; how to best adapt tools to country circumstances; and preferred institutional designs, including how to address political economy risks. As such, policy makers should move carefully in adopting tools.
Differential Effects Of Macroprudential Policy
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Author : Nina Biljanovska
language : en
Publisher: International Monetary Fund
Release Date : 2023-02-24
Differential Effects Of Macroprudential Policy written by Nina Biljanovska and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-02-24 with Business & Economics categories.
We explore the differential effects of lender-based macroprudential policies on new mortgage borrowing for households of different income using a comprehensive dataset that links macroprudential policy actions with household survey data for European Union countries. The main results suggest that higher-income households on average experience a larger reduction in mortgage loan size than lower-income households when regulation targeting total lenders’ assets tightens. In contrast, lower-income households on average experience a larger reduction in mortgage loan size than higher-income households when regulation targeting lenders’ capital requirements tightens. We also provide evidence of the different channels through which the differential effects operate.
Monetary And Macroprudential Policy Coordination Among Multiple Equilibria
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Author : Mr.Itai Agur
language : en
Publisher: International Monetary Fund
Release Date : 2018-11-02
Monetary And Macroprudential Policy Coordination Among Multiple Equilibria written by Mr.Itai Agur and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-11-02 with Business & Economics categories.
The notion of a tradeoff between output and financial stabilization is based on monetary-macroprudential models with unique equilibria. Using a game theory setup, this paper shows that multiple equilibria lead to qualitatively different results. Monetary and macroprudential authorities have tools that impose externalities on each other's objectives. One of the tools (macroprudential) is coarse, while the other (monetary policy) is unconstrained. We find that this asymmetry always leads to multiple equilibria, and show that under economically relevant conditions the authorities prefer different equilibria. Giving the unconstrained authority a weight on "helping" the constrained authority ("leaning against the wind") now has unexpected effects. The relation between this weight and the difficulty of coordinating is hump-shaped, and therefore a small degree of leaning worsens outcomes on both authorities' objectives.
U S Monetary Policy Shock Spillovers Evidence From Firm Level Data
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Author : Elif Arbatli Saxegaard
language : en
Publisher: International Monetary Fund
Release Date : 2022-09-16
U S Monetary Policy Shock Spillovers Evidence From Firm Level Data written by Elif Arbatli Saxegaard and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-09-16 with Business & Economics categories.
We examine three main channels through which U.S. monetary policy shocks affect firm investment in foreign countries: (1) the balance sheet channel; (2) the financial channel of the exchange rate; and (3) the trade channel. For this purpose, we use quarterly firm-level data for 63 advanced economies (AEs) and emerging market and developing economies (EMDEs) over 1996-2016. Our results suggest an important and independent role for all three key channels. U.S. monetary policy shocks have larger effects on investment for firms that are more leveraged (balance sheet channel), for firms that have a higher share of debt in foreign currency (financial channel of the exchange rate), and for firms that operate in sectors with higher export dependence (trade channel). Back-of-the-envelope calculations suggest that the balance sheet channel is the most important channel of transmission of U.S. monetary policy shocks on aggregate firm investment.
Leaning Against The Wind A Cost Benefit Analysis For An Integrated Policy Framework
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Author : Mr.Luis Brandao-Marques
language : en
Publisher: International Monetary Fund
Release Date : 2020-07-07
Leaning Against The Wind A Cost Benefit Analysis For An Integrated Policy Framework written by Mr.Luis Brandao-Marques and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-07-07 with Business & Economics categories.
This paper takes a new approach to assess the costs and benefits of using different policy tools—macroprudential, monetary, foreign exchange interventions, and capital flow management—in response to changes in financial conditions. The approach evaluates net benefits of policies using quadratic loss functions, estimating policy effects on the full distribution of future output growth and inflation with quantile regressions. Tightening macroprudential policy dampens downside risks to growth stemming from loose financial conditions, and is beneficial in net terms. By contrast, tightening monetary policy entails net losses, calling for caution in the use of monetary policy to “lean against the wind.” These findings hold when policies are used in response to easing global financial conditions. Buying foreign-exchange or tightening capital controls has small net benefits.