Capital Flows, Financial Intermediation and Macroprudential Policies

Author/Editor:

Matteo Ghilardi ; Shanaka J Peiris

Publication Date:

August 21, 2014

Electronic Access:

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Summary:

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. The key result is that macro-prudential measures can usefully complement monetary policy. Countercyclical macroprudential polices can help reduce macroeconomic volatility and enhance welfare. The results also demonstrate the importance of capital flows and financial stability for business cycle fluctuations as well as the role of supply side financial accelerator effects in the amplification and propagation of shocks.

Series:

Working Paper No. 2014/157

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

English

Publication Date:

August 21, 2014

ISBN/ISSN:

9781498365659/1018-5941

Stock No:

WPIEA2014157

Pages:

31

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