IDEAS home Printed from https://ideas.repec.org/p/fip/fednls/87187.html
   My bibliography  Save this paper

Financial Crises and the Desirability of Macroprudential Policy

Author

Abstract

The global financial crisis has put financial stability risks?and the potential role of macroprudential policies in addressing them?at the forefront of policy debates. The challenge for macroeconomists is to develop new models that are consistent with the data while being able to capture the highly nonlinear nature of crisis episodes. In this post, we evaluate the impact of a macroprudential policy that has the government tilt incentives for banks to encourage them to build up their equity positions. The government has a role since individual banks do not internalize the systemic benefit of having more bank equity. Our model allows for an evaluation of the tradeoff between the size of such incentives and the probability of a future financial crisis.

Suggested Citation

  • Ozge Akinci & Albert Queraltó, 2017. "Financial Crises and the Desirability of Macroprudential Policy," Liberty Street Economics 20170410, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87187
    as

    Download full text from publisher

    File URL: https://libertystreeteconomics.newyorkfed.org/2017/04/financial-crises-and-the-desirability-of-macroprudential-policy.html
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    occasionally binding constraints; sudden stops; financial intermediation; financial stability policy; leverage constraints;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednls:87187. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.