Capital Flows, Financial Intermediation and Macroprudential Policies
IMF Working Papers, August 21, 2014
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Bibliographic details
- Authors: Matteo Ghilardi, Shanaka J Peiris
- Published: August 21, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498365659.001
Overview
- This paper develops an open-economy DSGE model with an optimizing banking sector to assess the role of capital flows, macro-financial linkages, and macroprudential policies in emerging Asia.
- Authors: Matteo Ghilardi, Shanaka J Peiris.
- Publication date: August 21, 2014.
Key findings
- Macro-prudential measures can usefully complement monetary policy.
- Countercyclical macroprudential polices can help reduce macroeconomic volatility and enhance welfare.
- Capital flows and financial stability are important for business cycle fluctuations.
- Supply side financial accelerator effects play a role in the amplification and propagation of shocks.
Policy implications and recommendations
- Use countercyclical macroprudential policies alongside monetary policy to:
- Reduce macroeconomic volatility.
- Enhance welfare.
- Recognize the interaction between capital flows and financial stability when designing policy responses to business cycle shocks.
- Account for supply side financial accelerator effects in macro-financial policy frameworks.
Model and scope
- Model type: open-economy DSGE model with an optimizing banking sector.
- Geographic focus: emerging Asia.
- Analytical focus: capital flows, macro-financial linkages, macroprudential policies, propagation and amplification of shocks via financial channels.
Subjects and keywords
- Subject: Balance of payments; Banking; Capital adequacy requirements; Capital flows; Capital inflows; Credit; Financial regulation and supervision; Financial sector policy and analysis; Macroprudential policy; Money.
- Keywords: Asia and Pacific; asset price shock; bank capital shock; Capital adequacy requirements; Capital flows; Capital inflows; capital producer; capital regulation; capital requirement; countercyclical capital rule; Credit; Financial Frictions; Global; Macroprudential policy; Monetary Policy; WP.