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The Anatomy of the Transmission of Macroprudential Policies

Author : Viral V. Acharya

Publisher : International Monetary Fund

Page : 57 pages

File Size : 17,39 MB

Release : 2020-05-22

Category : Business & Economics

ISBN : 1513545159

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Book Description

We analyze how regulatory constraints on household leverage—in the form of loan-to-income and loan-to-value limits—a?ect residential mortgage credit and house prices as well as other asset classes not directly targeted by the limits. Supervisory loan level data suggest that mortgage credit is reallocated from low-to high-income borrowers and from urban to rural counties. This reallocation weakens the feedback loop between credit and house prices and slows down house price growth in “hot” housing markets. Consistent with constrained lenders adjusting their portfolio choice, more-a?ected banks drive this reallocation and substitute their risk-taking into holdings of securities and corporate credit.







Dampening Global Financial Shocks: Can Macroprudential Regulation Help (More than Capital Controls)?

Author : Katharina Bergant

Publisher : International Monetary Fund

Page : 41 pages

File Size : 12,66 MB

Release : 2020-06-26

Category : Business & Economics

ISBN : 1513547763

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Book Description

We show that macroprudential regulation can considerably dampen the impact of global financial shocks on emerging markets. More specifically, a tighter level of regulation reduces the sensitivity of GDP growth to VIX movements and capital flow shocks. A broad set of macroprudential tools contribute to this result, including measures targeting bank capital and liquidity, foreign currency mismatches, and risky forms of credit. We also find that tighter macroprudential regulation allows monetary policy to respond more countercyclically to global financial shocks. This could be an important channel through which macroprudential regulation enhances macroeconomic stability. These findings on the benefits of macroprudential regulation are particularly notable since we do not find evidence that stricter capital controls provide similar gains.



The Anatomy of Monetary Policy Transmission in an Emerging Market

Author : Kodjovi M. Eklou

Publisher : International Monetary Fund

Page : 29 pages

File Size : 36,17 MB

Release : 2023-07-07

Category : Business & Economics

ISBN :

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Book Description

Monetary policy transmission in EMs has been found to be weak historically due to under-developed financial markets and heavy central bank intervention in FX markets that undermine the exchange rate channel. Against this background, this paper investigates the transmission of monetary policy, including the role of external factors, in Malaysia and highlight findings that could be relevant for other EMs. We find an important role for the credit and the exchange rate channels. Further, we also find a complementary role for policy tools including Foreign Exchange Intervention (FXI) and liquidity tools such as Statutory Reserve Requirement in shaping the transmission of monetary policy. We then explore the spillover effects of external global factors including global monetary policy and global commodity prices on monetary policy transmission in a small open economy such as Malaysia. The results show that while global commodity prices do not impair monetary policy transmission, global monetary policy tightening could complement domestic efforts to achieve price stability by inducing a global disinflation. Finally, monetary policy transmission is delayed and weakened in high inflationary environment, with the implication that more aggressive and preemptive policy actions may be needed in such cases.



Managing the Sovereign-Bank Nexus

Author : Mr.Giovanni Dell'Ariccia

Publisher : International Monetary Fund

Page : 54 pages

File Size : 18,46 MB

Release : 2018-09-07

Category : Business & Economics

ISBN : 1484359623

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Book Description

This paper reviews empirical and theoretical work on the links between banks and their governments (the bank-sovereign nexus). How significant is this nexus? What do we know about it? To what extent is it a source of concern? What is the role of policy intervention? The paper concludes with a review of recent policy proposals.



Financial Crises in DSGE Models

Author : Mr.Jaromir Benes

Publisher : International Monetary Fund

Page : 59 pages

File Size : 46,69 MB

Release : 2014-04-04

Category : Business & Economics

ISBN : 1475524986

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Book Description

This paper presents the theoretical structure of MAPMOD, a new IMF model designed to study vulnerabilities associated with excessive credit expansions, and to support macroprudential policy analysis. In MAPMOD, bank loans create purchasing power that facilitates adjustments in the real economy. But excessively large and risky loans can impair balance sheets and sow the seeds of a financial crisis. Banks respond to losses through higher spreads and rapid credit cutbacks, with adverse effects for the real economy. These features allow the model to capture the basic facts of financial cycles. A companion paper studies the simulation properties of MAPMOD.



Global Waves of Debt

Author : M. Ayhan Kose

Publisher : World Bank Publications

Page : 403 pages

File Size : 27,29 MB

Release : 2021-03-03

Category : Business & Economics

ISBN : 1464815453

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Book Description

The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.



Policies for Macrofinancial Stability

Author : Mr.Bas B. Bakker

Publisher : International Monetary Fund

Page : 46 pages

File Size : 29,64 MB

Release : 2012-06-07

Category : Business & Economics

ISBN : 1475572689

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Book Description

This note explores the costs and benefits of different policy options to reduce the risks associated with credit booms, drawing upon several country experiences and the findings from econometric analysis.



Monetary Policy Transmission in Emerging Markets and Developing Economies

Author : Mr.Luis Brandao-Marques

Publisher : International Monetary Fund

Page : 54 pages

File Size : 10,9 MB

Release : 2020-02-21

Category : Business & Economics

ISBN : 1513529730

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Book Description

Central banks in emerging and developing economies (EMDEs) have been modernizing their monetary policy frameworks, often moving toward inflation targeting (IT). However, questions regarding the strength of monetary policy transmission from interest rates to inflation and output have often stalled progress. We conduct a novel empirical analysis using Jordà’s (2005) approach for 40 EMDEs to shed a light on monetary transmission in these countries. We find that interest rate hikes reduce output growth and inflation, once we explicitly account for the behavior of the exchange rate. Having a modern monetary policy framework—adopting IT and independent and transparent central banks—matters more for monetary transmission than financial development.