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Open Access

Macroprudential Policy and Credit Supply

Swiss Journal of Economics and Statistics2016152:BF03399430

https://doi.org/10.1007/BF03399430

Published: 11 January 2016

Summary

In this paper we analyze financial crises and the interactions of macroprudential policy and credit. Financial crises are recurrent systemic phenomena, often triggering deep and long-lasting recessions with large reductions in aggregate welfare, output and employment Importantly for policy, systemic financial crises are typically not random events triggered by exogenous events, but they tend to occur after periods of rapid, strong credit growth. Moreover, a credit crunch tends to follow in a financial crisis with negative aggregate real effects Macroprudential policy softens the credit supply cycles, with important positive effects on the aggregate real economy in crisis times.

Keyword

Financial crisesmacroprudential policycredit supplyrisk-takingcapitalliquidity

Notes

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