Macroprudential Policy: What We’ve Learned, Don’t Know, and Need to Do

Forbes, Kristin J.

doi:10.1257/pandp.20191056

Cited by 27 publications

(21 citation statements)

References 9 publications

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“…An example of uneven application is when the activity migrates to institutions that are not covered by the macroprudential instrument, such as corporates borrowing externally instead of domestically (Aiyar, Calomiris, and Wieladek, 2014;Bengui and Bianchi, 2018;Reinhardt and Sowerbutts, 2015). Forbes (2019) distinguishes the two effects by referring to leakages as shifts in credit to other institutions in the same country, and spillovers as shifts in credit to other countries 30…”

Section: Reconciling Macro and Micro Estimates: Statistical Power And Leakages And Spilloversmentioning

confidence: 99%

Effects of Macroprudential Policy

Araujo¹,

Patnam²,

Popescu³

et al. 2020

IMF Working Papers

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This paper builds a novel database on the effects of macroprudential policy drawing from 58 empirical studies, comprising over 6,000 results on a wide range of instruments and outcome variables. It encompasses information on statistical significance, standardized magnitudes, and other characteristics of the estimates. Using meta-analysis techniques, the paper estimates average effects to find i) statistically significant effects on credit, but with considerable heterogeneity across instruments; ii) weaker and more imprecise effects on house prices; iii) quantitatively stronger effects in emerging markets and among studies using micro-level data; and iii) statistically significant evidence of leakages and spillovers. Other findings include relatively stronger impacts for tightening than loosening actions and negative effects on economic activity in the near term.

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Section: Reconciling Macro and Micro Estimates: Statistical Power And Leakages And Spilloversmentioning

confidence: 99%

Effects of Macroprudential Policy

Araujo¹,

Patnam²,

Popescu³

et al. 2020

IMF Working Papers

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“…A fourth challenge in this literature is the relatively limited use of macroprudential tools to date (Forbes, 2019 and2020). Many tools have only been adjusted by small increments and to levels well below what models suggest are optimal (see Hanson et al, 2011 for the CCyB).…”

Section: A Empirical Challengesmentioning

confidence: 99%

The International Aspects of Macroprudential Policy

Forbes

2021

Annu. Rev. Econ.

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Countries are making more active use of macroprudential tools than in the past with the goal of improving the resilience of their broader financial systems. A growing body of evidence suggests that these tools can accomplish specific domestic goals and should reduce a country's vulnerability to many domestic and international shocks. The evidence also suggests, however, that these policies are not an elixir. They will not insulate economies from volatility, and they generate leakages to the nonbank financial system and spillovers through international borrowing, lending, and other cross-border exposures. Some of these unintended consequences can mitigate the effectiveness of macroprudential policies and generate new vulnerabilities and risks. The COVID-19 crisis provides a lens to evaluate the effectiveness of current macroprudential regulations during a period of extreme market volatility and economic stress. The experience to date suggests that macroprudential tools provide some benefits and should remain a focus of macroeconomic policy, but with realistic expectations about what they can accomplish. Expected final online publication date for the Annual Review of Economics, Volume 13 is August 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

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“…A fourth challenge in this literature is the relatively limited use of macroprudential tools to date (Forbes, 2019 and2020). A final challenge in this literature is that any analysis should assess not only the direct impact of macroprudential tools, but also any leakages or spillovers.…”

Section: A Empirical Challengesmentioning

confidence: 99%

The International Aspects of Macroprudential Policy

Forbes

2020

View full text Add to dashboard Cite

Countries are using macroprudential tools more actively with the goal of improving the resilience of their broader financial systems. A growing body of evidence suggests that these tools can accomplish specific domestic goals and should reduce country vulnerability to many domestic and international shocks. The evidence also suggests, however, that these policies are not an elixir. They will not insulate economies from volatility and they generate leakages to the nonbank financial system and spillovers through international borrowing, lending and other crossborder exposures. Some of these unintended consequences can mitigate the effectiveness of macroprudential policies and generate new vulnerabilities and risks. The "Corona Crisis" provides a lens to evaluate the effectiveness of current macroprudential regulations during a period of extreme market volatility and economic stress. Experience to date suggests that macroprudential tools provide some benefits and can help achieve certain macroeconomic goals, but they have limitations and expectations of what they can accomplish must be realistic.

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Macroprudential Policy: What We’ve Learned, Don’t Know, and Need to Do

Cited by 27 publications

References 9 publications

Effects of Macroprudential Policy

Effects of Macroprudential Policy

The International Aspects of Macroprudential Policy

The International Aspects of Macroprudential Policy

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