Monetary and Macroprudential Policies to Manage Capital Flows - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Monetary and Macroprudential Policies to Manage Capital Flows write by Juan Pablo Medina Guzman. This book was released on 2014-02-12. Monetary and Macroprudential Policies to Manage Capital Flows available in PDF, EPUB and Kindle. We study interactions between monetary and macroprudential policies in a model with nominal and financial frictions. The latter derive from a financial sector that provides credit and liquidity services that lead to a financial accelerator-cum-fire-sales amplification mechanism. In response to fluctuations in world interest rates, inflation targeting dominates standard Taylor rules, but leads to increased volatility in credit and asset prices. The use of a countercyclical macroprudential instrument in addition to the policy rate improves welfare and has important implications for the conduct of monetary policy. “Leaning against the wind” or augmenting a standard Taylor rule with an argument on credit growth may not be an effective policy response.
Monetary Policy and Macroprudential Regulation with Financial Frictions
Monetary Policy and Macroprudential Regulation with Financial Frictions - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Monetary Policy and Macroprudential Regulation with Financial Frictions write by Pierre-Richard Agenor. This book was released on 2020-11-10. Monetary Policy and Macroprudential Regulation with Financial Frictions available in PDF, EPUB and Kindle. 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.
Increasing Resilience to Large and Volatile Capital Flows—The Role of Macroprudential Policies
Increasing Resilience to Large and Volatile Capital Flows—The Role of Macroprudential Policies - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Increasing Resilience to Large and Volatile Capital Flows—The Role of Macroprudential Policies write by International Monetary Fund. Strategy, Policy, & Review Department. This book was released on 2017-05-07. Increasing Resilience to Large and Volatile Capital Flows—The Role of Macroprudential Policies available in PDF, EPUB and Kindle. Capital flows can deliver substantial benefits for countries, but also have the potential to contribute to a buildup of systemic financial risk. Benefits, such as enhanced investment and consumption smoothing, tend to be greater for countries whose financial and institutional development enables them to intermediate capital flows safely. Post-crisis reforms, including the development of macroprudential policies (MPPs), are helping to strengthen the resilience of financial systems including to shocks from capital flows. The Basel III process has improved the quality and level of capital, reduced leverage, and increased liquid asset holdings in financial systems. Drawing on and complementing such international reforms at the national level, robust macroprudential policy frameworks focused on mitigating systemic risk can improve the capacity of a financial system to safely intermediate cross-border flows. Macroprudential frameworks can play an important role over the capital flow cycle, and help members harness the benefits of capital flows. Introducing macroprudential measures (MPMs) preemptively can increase the resilience of the financial system to aggregate shocks, including those arising from capital inflows, and can contain the build-up of systemic vulnerabilities over time, even when such measures are not designed to limit capital flows. While the risks from capital outflows should be handled primarily by macroeconomic policies, a relaxation of MPMs may assist, as long as buffers are in place, in countering financial stresses from outflows. Capital flow liberalization should be supported by broad efforts to strengthen prudential regulation and supervision, including macroprudential policy frameworks. The Fund has two frameworks to help ensure that its advice on MPPs and policies related to capital flows is consistent and tailored to country circumstances. The frameworks (the Macroprudential framework and the Institutional View on capital flows) are consistent in terms of key principles, including avoiding using MPMs and capital flow management measures (CFMs) as a substitute for necessary macroeconomic adjustment. The appropriate classification of measures is important to ensure targeted advice consistent with the two frameworks. The conceptual framework for the assessment of measures laid out in this paper will assist staff in properly identifying MPMs and measures that are designed to limit capital flows and to reduce systemic financial risk stemming from such flows (CFM/MPMs), and thereby ensure the appropriate application of the Fund’s frameworks, so that staff policy advice is consistent and well targeted. The Fund will continue to develop and share expertise in using MPMs, and integrate these findings into its surveillance and technical assistance, which should contribute to building international understanding and experience on these issues.
Macroprudential Regulation of International Finance
Macroprudential Regulation of International Finance - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Macroprudential Regulation of International Finance write by Dongsoo Kang. This book was released on 2016-09-30. Macroprudential Regulation of International Finance available in PDF, EPUB and Kindle. Recent events, such as capital flow reversals and banking sector crises, have shaken faith in the widely held belief in the benefits of greater financial integration and financial deepening, which are typical in advanced economies. This book shows that emerging economies have often weathered the storm best despite the supposed burden of ‘weak institutions’. It demonstrates that a better policy framework requires reliable indicators of vulnerability to financial instability, as well as improved policy tools and automatic stabilizers that anticipate and limit the vulnerabilities to financial crises.
Facing the Global Financial Cycle: What Role for Policy
Facing the Global Financial Cycle: What Role for Policy - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Facing the Global Financial Cycle: What Role for Policy write by Nicoletta Batini. This book was released on 2021-02-12. Facing the Global Financial Cycle: What Role for Policy available in PDF, EPUB and Kindle. Abstract In this paper we ask whether countries can influence their exposure to changes in global financial conditions. Specifically, we show that even though we can model cross-country capital flows via a global factor that closely tracks changes in global financial conditions, there is a large degree of heterogeneity in the sensitivity of each country to this same global factor. We then evaluate whether this cross-country heterogeneity can be attributed to different policy choices, including measures of capital flow management, such as capital controls and macroprudential policies. In our main results, we show that higher levels of capital controls and macroprudential policies both dampen the sensitivity to the global factor. Furthermore, we show that countries’ monetary and exchange rate policies can also be successfully deployed. Overall, our results have implications that extend beyond the surge that preceded the 2008 global financial crisis, and that closely resonate in light of the financial disruptions that followed the COVID-19 pandemic.
