The Interaction Of Monetary And Macroprudential Policies In Dynamic Macro Models
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The Interaction Of Monetary And Macroprudential Policies In Dynamic Macro Models
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Author : Ivy Sabuga
language : en
Publisher:
Release Date : 2022
The Interaction Of Monetary And Macroprudential Policies In Dynamic Macro Models written by Ivy Sabuga and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.
The Interaction Of Monetary And Macroprudential Policies
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Author : International Monetary Fund. Monetary and Capital Markets Department
language : en
Publisher: International Monetary Fund
Release Date : 2012-12-29
The Interaction Of Monetary And Macroprudential Policies written by International Monetary Fund. Monetary and Capital Markets Department 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 2012-12-29 with Business & Economics categories.
The recent crisis showed that price stability does not guarantee macroeconomic stability. In several countries, dangerous financial imbalances developed under low inflation and small output gaps. To ensure macroeconomic stability, policy has to include financial stability as an additional objective. But a new objective demands new tools: macroprudential tools that can target specific sources of financial imbalances (something monetary policy is not well suited to do). Effective macroprudential policies (which include a range of constraints on leverage and the composition of balance sheets) could then contain risks ex ante and help build buffers to absorb shocks ex post.
Macroprudential And Monetary Policy Interactions In A Dsge Model For Sweden
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Author : Mr.Jiaqian Chen
language : en
Publisher: International Monetary Fund
Release Date : 2016-03-23
Macroprudential And Monetary Policy Interactions In A Dsge Model For Sweden written by Mr.Jiaqian Chen 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 2016-03-23 with Business & Economics categories.
We analyse the effects of macroprudential and monetary policies and their interactions using an estimated dynamic stochastic general equilibrium (DSGE) model tailored to Sweden. Households face a ceiling on their loan-to-value ratio and must amortize their mortgages. The government grants mortgage interest payment deductions. Lending rates are affected by mortgage risk weights. We find that demand-side macroprudential measures are more effective in curbing household debt ratios than monetary policy, and they are less costly in terms of foregone consumption. A tighter macroprudential stance is also found to be welfare improving, by promoting lower consumption volatility in response to shocks, especially when using a combination of macroprudential instruments.
Monetary Policy And Macroprudential Regulation With Financial Frictions
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Author : Pierre-Richard Agenor
language : en
Publisher: MIT Press
Release Date : 2020-11-10
Monetary Policy And Macroprudential Regulation With Financial Frictions written by Pierre-Richard Agenor and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-11-10 with Business & Economics categories.
An integrated analysis of how financial frictions can be accounted for in macroeconomic models built to study monetary policy and macroprudential regulation. Since the global financial crisis, there has been a renewed effort to emphasize financial frictions in designing closed- and open-economy macroeconomic models for monetary and macroprudential policy analysis. Drawing on the extensive literature of the past decade as well as his own contributions, in this book Pierre-Richard Age&́nor provides a unified set of theoretical and quantitative macroeconomic models with financial frictions to explore issues that have emerged in the wake of the crisis. These include the need to understand better how the financial system amplifies and propagates shocks originating elsewhere in the economy; how it can itself be a source of aggregate fluctuations; the extent to which central banks should account for financial stability considerations in the conduct of monetary policy; whether national central banks and regulators should coordinate their policies to promote macroeconomic and financial stability; and how much countercyclical macroprudential policies should be coordinated at the international level to mitigate financial spillovers across countries.
Macro Prudential Policy In A Fisherian Model Of Financial Innovation
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Author : Javier Bianchi
language : en
Publisher: International Monetary Fund
Release Date : 2012-07-01
Macro Prudential Policy In A Fisherian Model Of Financial Innovation written by Javier Bianchi 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 2012-07-01 with Business & Economics categories.
The interaction between credit frictions, financial innovation, and a switch from optimistic to pessimistic beliefs played a central role in the 2008 financial crisis. This paper develops a quantitative general equilibrium framework in which this interaction drives the financial amplification mechanism to study the effects of macro-prudential policy. Financial innovation enhances the ability of agents to collateralize assets into debt, but the riskiness of this new regime can only be learned over time. Beliefs about transition probabilities across states with high and low ability to borrow change as agents learn from observed realizations of financial conditions. At the same time, the collateral constraint introduces a pecuniary externality, because agents fail to internalize the effect of their borrowing decisions on asset prices. Quantitative analysis shows that the effectiveness of macro-prudential policy in this environment depends on the government's information set, the tightness of credit constraints and the pace at which optimism surges in the early stages of financial innovation. The policy is least effective when the government is as uninformed as private agents, credit constraints are tight, and optimism builds quickly.
Macroprudential Policy And Practice
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Author : Paul Mizen
language : en
Publisher: Cambridge University Press
Release Date : 2018-08-23
Macroprudential Policy And Practice written by Paul Mizen and has been published by Cambridge University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-08-23 with Business & Economics categories.
A guide to the latest theoretical developments in macroprudential policy, the newest tool in central banking policymaking circles.
The Development Dimension Strengthening Macroprudential Policies In Emerging Asia Adapting To Green Goals And Fintech
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Author : OECD
language : en
Publisher: OECD Publishing
Release Date : 2021-06-29
The Development Dimension Strengthening Macroprudential Policies In Emerging Asia Adapting To Green Goals And Fintech written by OECD and has been published by OECD Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-06-29 with categories.
Many Emerging Asian countries have been refining macroprudential policies, particularly since the Global Financial Crisis. This publication provides a detailed overview of the current macroprudential policy situation in Emerging Asian countries and explores how the macroprudential policy toolkit has evolved.
Macro Financial Stability Policy In A Globalised World Lessons From International Experience Selected Papers From The Asian Monetary Policy Forum 2021 Special Edition And Mas Bis Conference
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Author : Edward S Robinson
language : en
Publisher: World Scientific
Release Date : 2022-12-28
Macro Financial Stability Policy In A Globalised World Lessons From International Experience Selected Papers From The Asian Monetary Policy Forum 2021 Special Edition And Mas Bis Conference written by Edward S Robinson and has been published by World Scientific this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-12-28 with Business & Economics categories.
Since at least the Great Financial Crisis, authorities around the world have increasingly relied on macroprudential policy to help secure financial stability and complement monetary policy as an integral element of a broader macro-financial stability framework. In today's interconnected global financial system, policy actions taken by the major advanced economies can have spillovers on the rest of the world through their impact on capital flows and exchange rates, potentially generating vulnerabilities across borders. Conversely, in emerging market economies, macroprudential policy as well as foreign exchange intervention and/or capital flow management policy can help mitigate the corresponding impact. This can in turn generate spillbacks on advanced economies — spillbacks that have become more sizeable as the emerging market economies' heft in the world has grown. Yet little is known about these interactions.The contents of this book are based on a conference held on 26-28 May 2021 and jointly hosted by the Monetary Authority of Singapore (MAS) and the Bank for International Settlements (BIS). It aims to contribute to existing literature on macro-financial policymaking by providing an overall conceptual framework and documenting the latest global trends and country experiences. In particular, it highlights the role of international spillovers and spillbacks, paying particular attention to emerging market economies. This book is essential reading for academics, graduate students and economic professionals. It can also serve as a handbook for policymakers at central banks, regulatory authorities and other government agencies tasked with designing and implementing macroprudential or more generally macro-financial stability policies. The book will also be of interest to researchers at international organisations.
Macroprudential Policies In Response To External Financial Shocks
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Author : Irineu de Carvalho Filho
language : en
Publisher: International Monetary Fund
Release Date : 2023-01-20
Macroprudential Policies In Response To External Financial Shocks written by Irineu de Carvalho Filho 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 2023-01-20 with Business & Economics categories.
This paper examines how countries use Macroprudential Policies (MaPs) to respond to external shocks such as US monetary policy surprises or fluctuations in capital flows. Constructing a model of a small open economy with financial frictions and a MaP authority that adjusts loan to value (LTV) ratio limits on borrowers and capital adequacy ratio (CAR) limits on banks, we show that using MaPs where stochastic external financial shocks are present entails a trade-off between macro-financial volatility and GDP growth. The terms of the trade-off are a function of a few country characteristics that amplify financial channels of external monetary shocks. Estimating MaP reaction functions for a panel of 41 countries in the period 2000–2017, we find that countercyclical macroprudential policy in response to surprise US monetary tightening is more likely for countries with net short currency mismatches (that is, foreign currency denominated liabilities larger than foreign currency denominated assets), consistent with the model’s predictions. The paper also finds that domestic credit and interest rates are more insulated from US monetary tightening for countries that employ MaPs countercyclically.
Shocks And Capital Flows
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Author : Mr. Gaston Gelos
language : en
Publisher: International Monetary Fund
Release Date : 2023-10-27
Shocks And Capital Flows written by Mr. Gaston Gelos 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 2023-10-27 with Business & Economics categories.
The high exposure of open economies to shocks makes them particularly vulnerable to volatile capital flows and advanced economy monetary policy spillovers. How should and do domestic policymakers respond? The traditional answer has been to use flexible exchange rates as a shock absorber. But flexible exchange rates may not offer full insulation when financial markets are imperfect. This book brings together recent empirical studies at the International Monetary Fund (IMF) on the effectiveness of different tools in responding to such shocks. The 18 chapters in this volume provide a rich background to the recently launched Integrated Policy Framework by the IMF. They comprise assessments of countries’ actual use of different tools, as well as in-depth evaluations of their effectiveness and side effects, covering macroprudential policies, monetary policy, foreign-exchange intervention, and capital flow management policies. Many of the studies involve new data and methods to tackle the inherently difficult problems in identifying and comparing the effects of policies under different circumstances. As a result, the volume offers the reader a comprehensive, in-depth coverage of the policy-oriented empirical research that has informed the development of a new way of thinking about open-economy macroeconomics at the IMF.