With Great Power Comes Great Responsibility: Macroprudential Tools at Work in Canada

Author/Editor: Ivo Krznar ; James Morsink
Publication Date: May 12, 2014
Electronic Access: Free Full text (PDF file size is 682KB).
Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: The goal of this paper is to assess the effectiveness of the policy measures taken by Canadian authorities to address the housing boom. We find that the the last three rounds of macroprudential policies implemented since 2010 were associated with lower mortgage credit growth and house price growth. The international experience suggests that—in addition to tighter loan-to-value limits and shorter amortization periods—lower caps on the debt-to-income ratio and higher risk weights could be effective if the housing boom were to reignite. Over the medium term, the authorities could consider structural measures to further improve the soundness of housing finance.
Series: Working Paper No. 14/83
Subject(s): Macroprudential Policy | Canada | Housing | Credit expansion | Housing prices

Publication Date: May 12, 2014
ISBN/ISSN: 9781484383445/1018-5941 Format: Paper
Stock No: WPIEA2014083 Pages: 38
US$18.00 (Academic Rate:
US$18.00 )
Please address any questions about this title to publications@imf.org