Macroprudential Policy and Practice

Macroeconomic Policy Making

by Paul D. Mizen (Editor)

Macroprudential policy is perhaps the most important new development in central bank policymaking circles since the global financial crisis, and reliance on such policies has continued to spread. The crisis, which showed the limits of conventional monetary policy as a tool to deal with financial stability, forced a wide-ranging rethink of economic policies, their interactions and their repercussions. It has led to new forms of intervention, of regulation and of supervisory practice. Macroprudential regulation is now one of the most important topics in modern macroeconomics, because it concerns measures put in place to reduce the risks and costs of the instability caused by financial crises. Written by senior figures from the worlds of academia and banking, this volume combines theoretical approaches with hard evidence of the policy's achievements in many countries. It is the first in-depth analysis of macroprudential instruments for policymakers, banks and economists.

Genres: Economics

322 pages, Hardcover

Published September 27, 2018

Reviews

[Richard Marney · Rating 4 out of 5]

As the title indicates, the book is collection of essays focused on the often under appreciated member of the policy tool fraternity, macro-prudential policy (“MPP”). The editors do an admirable job in guiding the reader through enough of the theory (Bernanke-Blinder for a closed, Mindel Fleming for an open economy) without extinguishing your interest before moving into an informative and practical discussion of real life applications / cases. The expansive and rigorous content defies a short review. As a hint to the book’s messages, however, consider the questions: (1) when analyzing the possible use of fiscal, monetary and/or MPP, what are the considerations of when and when not, why or why not? (2) how the use of MPP to influence credit supply and perhaps asset prices might influence monetary transmission? (3) What are the time-lag issues between policy action and effect and how do these influence the design of policy. (4) How do macroeconomic/financial feedback loops differ in open vs. closed economies? (5) How does the development of local financial markets shape these feedback loops? (6) How does the definition of financial stability influence policy making? Happy Reading!