Macroprudential policies and credit creation
In this macroeconomics seminar, Dr Tim Robinson from the University of Melbourne will discuss his research into macroprudential policy rules.
We study the effects of macroprudential policy rules in a calibrated small-open economy model in which banks effectively create purchasing power. We find that borrower-based macroprudential policies that affect the demand for housing and credit are particularly effective in reducing fluctuations in credit, house prices and defaults, and in improving welfare. They generally outperform financial institution based policies that affect the supply of credit.