Macroprudential Policies in EMEs: Theory and Practice

Abstract:     
This paper examines the macroeconomic and microeconomic dimensions of systemic risk. The design of practical macroprudential policies to address such risks is complex. Issues to be tackled include: (a) statistics to accurately measure currency and maturity mismatches (which usually lie at the heart of EME crises) and the degree of leverage; (b) clarification of macroeconomic and financial system dynamics; (c) the selection of policy tools best suited for particular countries; and (d) quantification of the many dimensions of the “cycle”. Coordination between macroprudential and monetary policy will raise a number of thorny issues.

Full publication: Financial Sector Regulation for Growth, Equity and Stability:
http://ssrn.com/abstract=2002004

Number of Pages in PDF File: 15

Keywords: Macroprudential policies, externalities, monetary policy, regulation of capital flows

JEL Classification: E44, E58, F36, G28

Accepted Paper Series