{
  "title": "Macroprudential Policies and Capital Controls Over Financial Cycles",
  "publication": "IMF Working Papers, August 25, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2023/08/25/macroprudential-policies-and-capital-controls-over-financial-cycles-536799",
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  "summary": "In this paper we assess the effectiveness of macroprudential policies and capital controls in supporting financial stability. We construct a large and granular dataset on prudential and capital flow management measures covering 53 countries during 1996-2016.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- The paper assesses the effectiveness of macroprudential policies and capital controls in supporting financial stability.\n- A large and granular dataset on prudential and capital flow management measures covering 53 countries during 1996-2016 is constructed.\n- Conditional on a credit boom, the study investigates the impact of these policy measures on the probability that the credit boom ends in a bust.\n- Main conclusion: macroprudential tools are effective from this perspective. If credit booms are accompanied by capital flow surges, in addition to macroprudential tools, capital controls on money market instruments including cross-border interbank lending tend to contribute to reducing the likelihood of a credit bust."
    },
    {
      "heading": "Data and Methodology",
      "content": "- Dataset: prudential and capital flow management measures, 53 countries, 1996-2016.\n- Analytical focus: episodes conditional on a credit boom and probability of transition to a credit bust.\n- Policy instrument detail: macroprudential tools and capital controls on money market instruments, including cross-border interbank lending."
    },
    {
      "heading": "Key Findings",
      "content": "- Macroprudential tools reduce the probability that a credit boom ends in a bust.\n- When credit booms coincide with capital flow surges, capital controls targeting money market instruments (including cross-border interbank lending), in addition to macroprudential measures, tend to lower the likelihood of a credit bust."
    },
    {
      "heading": "Policy Implications",
      "content": "- Deploy macroprudential tools to mitigate the risk that credit booms culminate in credit busts.\n- Consider capital controls on money market instruments, including cross-border interbank lending, as complementary measures when credit booms are accompanied by capital flow surges.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2023/08/25/macroprudential-policies-and-capital-controls-over-financial-cycles-536799"
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    "Authors: Maria Arakelyan, Adam Gersl, Martin Schindler",
    "Published: August 25, 2023",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400248757.001",
    "The paper assesses the effectiveness of macroprudential policies and capital controls in supporting financial stability.",
    "A large and granular dataset on prudential and capital flow management measures covering 53 countries during 1996-2016 is constructed.",
    "Conditional on a credit boom, the study investigates the impact of these policy measures on the probability that the credit boom ends in a bust.",
    "Main conclusion: macroprudential tools are effective from this perspective. If credit booms are accompanied by capital flow surges, in addition to macroprudential tools, capital controls on money market instruments including cross-border interbank lending tend to contribute to reducing the likelihood of a credit bust.",
    "Dataset: prudential and capital flow management measures, 53 countries, 1996-2016.",
    "Analytical focus: episodes conditional on a credit boom and probability of transition to a credit bust.",
    "Policy instrument detail: macroprudential tools and capital controls on money market instruments, including cross-border interbank lending.",
    "Macroprudential tools reduce the probability that a credit boom ends in a bust.",
    "When credit booms coincide with capital flow surges, capital controls targeting money market instruments (including cross-border interbank lending), in addition to macroprudential measures, tend to lower the likelihood of a credit bust.",
    "Deploy macroprudential tools to mitigate the risk that credit booms culminate in credit busts.",
    "Consider capital controls on money market instruments, including cross-border interbank lending, as complementary measures when credit booms are accompanied by capital flow surges.",
    "**Working Paper**"
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