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The Use and Effectiveness of Macroprudential Policies: New Evidence

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Listed:
  • Mr. Eugenio M Cerutti
  • Mr. Stijn Claessens
  • Mr. Luc Laeven

Abstract

Using a recent IMF survey and expanding on previous studies, we document the use of macroprudential policies for 119 countries over the 2000-13 period, covering many instruments. Emerging economies use macroprudential policies most frequently, especially foreign exchange related ones, while advanced countries use borrower-based policies more. Usage is generally associated with lower growth in credit, notably in household credit. Effects are less in financially more developed and open economies, however, and usage comes with greater cross-border borrowing, suggesting some avoidance. And while macroprudential policies can help manage financial cycles, they work less well in busts.

Suggested Citation

  • Mr. Eugenio M Cerutti & Mr. Stijn Claessens & Mr. Luc Laeven, 2015. "The Use and Effectiveness of Macroprudential Policies: New Evidence," IMF Working Papers 2015/061, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2015/061
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    More about this item

    Keywords

    WP; open economy; foreign currency; exchange rate; standard deviation; capital account; credit growth; dependent variable; regression result; Macroprudential policies; Effectiveness; Procyclicality; Financial cycles; prudential policy; MPI index; Macroprudential policy; Credit; Housing prices; Emerging and frontier financial markets; Central bank policy rate; Global;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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