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Macroprudential Policies in a Global Perspective

  • Olivier Jeanne

    (Johns Hopkins University, Peterson Institute for International Economics, NBER and CEPR (E-mail: ojeanne@jhu.edu))

This paper analyzes the case for the international coordination of macroprudential policies in the context of a simple theoretical framework. Both domestic macroprudential policies and prudential capital controls have international spillovers through their impact on capital flows. The uncoordinated use of macroprudential policies may lead to a "capital war" that depresses global interest rates. International coordination of macroprudential policies is not warranted, however, unless there is unemployment in some countries. There is scope for Pareto-improving international policy coordination when one part of the world is in a liquidity trap while the rest of the world accumulates reserves for prudential reasons.

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File URL: http://www.imes.boj.or.jp/research/papers/english/14-E-01.pdf
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Paper provided by Institute for Monetary and Economic Studies, Bank of Japan in its series IMES Discussion Paper Series with number 14-E-01.

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Date of creation: Feb 2014
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Handle: RePEc:ime:imedps:14-e-01
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