In many advanced economies, policymakers try to stabilise and support activity while financial and non-financial agents undergo a process of balance sheet repair and deleveraging. The task is challenging. Headwinds borne out of deleveraging explain why – to quote Martin Wolf – "economies stagnate, while policy is aggressive" (2012).
Jean-Pierre Landau, 18 April 2013
Preventive macroprudential policy
Charles A.E. Goodhart, Enrico Perotti, 29 February 2012
It is easy to think of large banks as tall city buildings. Banks are highly leveraged intermediaries, building credit volume on an equity-capital foundation. Houses, like banks, are worth more when located in dynamic cities where land costs are high. Builders naturally seek to economise on lot size, depth of stone foundations, and construction material.
Money and banking – realigned efficiently
Hans Gersbach, 12 October 2011
Like price stability, a sturdy banking system is an economy-wide objective. In macroeconomic policymaking, realigning money and banking requires a novel architecture and a new macro instrument to safeguard financial stability. There are two major issues that urgently need to be addressed. First, what kind of instrument could be devised and put into use?
Dividend restrictions as macroprudential regulation
Charles A.E. Goodhart, Dimitri Tsomocos, Udara Peiris, Alexandros Vardoulakis, 18 February 2010
Since August 2007, banks have accumulated losses of $1.11 trillion in the current crisis. But what is striking is that banks have continued to pay out dividends, even though the value of common equity has suffered immensely.
The macroprudential approach to regulation and supervision
Claudio Borio, 14 April 2009
There is now a growing consensus among policymakers and academics that a key element to improve safeguards against financial instability is to strengthen the “macroprudential” orientation of regulatory and supervisory frameworks. Paraphrasing Milton Friedman, one could even say that “we are all macroprudentialists now”.
- Fiscal consolidation: At what speed?Blanchard, Leigh
- Public debt and economic growth, one more timePanizza, Presbitero
- Escaping liquidity traps: Lessons from the UK’s 1930s escapeCrafts
- The lessons of the North Atlantic crisis for economic theory and policyStiglitz
- Rethinking macroeconomic policyBlanchard
- A tale of two depressions: What do the new data tell us? February 2010 updateEichengreen, O’Rourke
- Educated in America: College graduates and high school dropoutsHeckman, LaFontaine
- Eurozone breakup would trigger the mother of all financial crisesEichengreen
- Debt, deleveraging, and the liquidity trap: A new modelKrugman
- Panic-driven austerity in the Eurozone and its implicationsDe Grauwe, Ji
Reichlin, Baldwin, 14 April 2013
Reichlin, Turner, Woodford