IDEAS home Printed from https://ideas.repec.org/p/fip/fedgfe/2013-29.html
   My bibliography  Save this paper

The history of cyclical macroprudential policy in the United States

Author

Listed:
  • Douglas J. Elliott
  • Greg Feldberg
  • Andreas Lehnert

Abstract

Since the financial crisis of 2007-2009, policymakers have debated the need for a new toolkit of cyclical "macroprudential" policies to constrain the build-up of risks in financial markets, for example, by dampening credit-fueled asset bubbles. These discussions tend to ignore America's long and varied history with many of the instruments under consideration to smooth the credit cycle, presumably because of their sparse usage in the last three decades. We provide the first comprehensive survey and historic narrative of these efforts. The tools whose background and use we describe include underwriting standards, reserve requirements, deposit rate ceilings, credit growth limits, supervisory pressure, and other financial regulatory policy actions. The contemporary debates over these tools highlighted a variety of concerns, including "speculation," undesirable rates of inflation, and high levels of consumer spending, among others. Ongoing statistical work suggests that macroprudential tightening lowers consumer debt but macroprudential easing does not increase it.

Suggested Citation

  • Douglas J. Elliott & Greg Feldberg & Andreas Lehnert, 2013. "The history of cyclical macroprudential policy in the United States," Finance and Economics Discussion Series 2013-29, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgfe:2013-29
    as

    Download full text from publisher

    File URL: http://www.federalreserve.gov/pubs/feds/2013/201329/201329abs.html
    Download Restriction: no

    File URL: http://www.federalreserve.gov/pubs/feds/2013/201329/201329pap.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. repec:ucp:bkecon:9780226519999 is not listed on IDEAS
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2013. "Shifting Mandates: The Federal Reserve's First Centennial," American Economic Review, American Economic Association, vol. 103(3), pages 48-54, May.
    3. Moritz Schularick & Alan M. Taylor, 2012. "Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870-2008," American Economic Review, American Economic Association, vol. 102(2), pages 1029-1061, April.
    4. A. D. Gayer, 1935. "The Banking Act of 1935," The Quarterly Journal of Economics, Oxford University Press, vol. 50(1), pages 97-116.
    5. Mark Carlson, 2015. "Lessons from the Historical Use of Reserve Requirements in the United States to Promote Bank Liquidity," International Journal of Central Banking, International Journal of Central Banking, vol. 11(1), pages 191-224, January.
    6. Joseph D. Coppock, 1940. "Government Agencies of Consumer Instalment Credit," NBER Books, National Bureau of Economic Research, Inc, number copp40-1, December.
    7. Paul Kupiec, 1998. "Margin Requirements, Volatility, and Market Integrity: What Have We Learned Since the Crash?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 13(3), pages 231-255, June.
    8. Mark A. Carlson & David C. Wheelock, 2012. "The lender of last resort: lessons from the Fed’s first 100 years," Working Papers 2012-056, Federal Reserve Bank of St. Louis.
    9. Leo Grebler, 1960. "Housing Issues in Economic Stabilization Policy," NBER Books, National Bureau of Economic Research, Inc, number greb60-1, December.
    10. Kenneth A. Snowden, 2010. "The Anatomy of a Residential Mortgage Crisis: A Look Back to the 1930s," NBER Working Papers 16244, National Bureau of Economic Research, Inc.
    11. Leo Grebler, 1960. "Introduction to "Housing Issues in Economic Stabilization Policy"," NBER Chapters,in: Housing Issues in Economic Stabilization Policy, pages 1-15 National Bureau of Economic Research, Inc.
    12. Jane D'Arista, James Boyce, 2002. "Where Credit Is Due: Allocating Credit to Advance Environmental Goals," Challenge, Taylor & Francis Journals, vol. 45(3), pages 58-82.
    13. Anil K Kashyap & Richard Berner & Charles A E Goodhart, 2011. "The Macroprudential Toolkit," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 59(2), pages 145-161, June.
    14. Saul B. Klaman, 1961. "The Postwar Residential Mortgage Market," NBER Books, National Bureau of Economic Research, Inc, number klam61-1, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:eee:jfinin:v:34:y:2018:i:c:p:17-31 is not listed on IDEAS
    2. Kim, Sooji & Plosser, Matthew C. & Santos, João A.C., 2018. "Macroprudential policy and the revolving door of risk: Lessons from leveraged lending guidance," Journal of Financial Intermediation, Elsevier, vol. 34(C), pages 17-31.
    3. Campiglio, Emanuele, 2016. "Beyond carbon pricing: The role of banking and monetary policy in financing the transition to a low-carbon economy," Ecological Economics, Elsevier, vol. 121(C), pages 220-230.
    4. Greenwood-Nimmo, Matthew & Tarassow, Artur, 2016. "Monetary shocks, macroprudential shocks and financial stability," Economic Modelling, Elsevier, vol. 56(C), pages 11-24.
    5. Jose M Berrospide & Ricardo Correa & Linda S Goldberg & Friederike Niepmann, 2017. "International Banking and Cross-Border Effects of Regulation: Lessons from the United States," International Journal of Central Banking, International Journal of Central Banking, vol. 13(2), pages 435-476, March.
    6. repec:agr:journl:v:1(614):y:2018:i:1(614):p:41-54 is not listed on IDEAS
    7. Georgios Moratis & Plutarchos Sakellaris, 2017. "Measuring the systemic importance of banks," Working Papers 240, Bank of Greece.
    8. Klingelhöfer, Jan & Sun, Rongrong, 2017. "Macroprudential Policy, Central Banks and Financial Stability: Evidence from China," MPRA Paper 79033, University Library of Munich, Germany.
    9. Gabriele Galati & Richhild Moessner, 2014. "What do we know about the effects of macroprudential policy?," DNB Working Papers 440, Netherlands Central Bank, Research Department.
    10. repec:eee:finsta:v:30:y:2017:i:c:p:209-228 is not listed on IDEAS
    11. repec:eee:jbfina:v:79:y:2017:i:c:p:110-128 is not listed on IDEAS

    More about this item

    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:fedgfe:2013-29. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (FRB Librarian). General contact details of provider: http://edirc.repec.org/data/frbgvus.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.