Institute for Macroeconomics and Econometrics
University of Bonn
Kaiserplatz, 7-9 4th floor
53113, Bonn, Germany
Institutional Affiliation: University of Bonn
NBER Working Papers and Publications
|September 2018||The Costs of Macroprudential Policy|
with , : w24989
Central banks increasingly rely on macroprudential measures to manage the financial cycle. However, the effects of such policies on the core objectives of monetary policy to stabilise output and inflation are largely unknown. In this paper, we quantify the effects of changes in maximum loan-to-value (LTV) ratios on output and inflation. We rely on a narrative identification approach based on detailed reading of policy-makers’ objectives when implementing the measures. We find that over a four year horizon, a 10 percentage point decrease in the maximum LTV ratio leads to a 1.1% reduction in output. As a rule of thumb, the impact of a 10 percentage point LTV tightening can be viewed as roughly comparable to that of a 25 basis point increase in the policy rate. However, the effects are imprec...
Published: Björn Richter & Moritz Schularick & Ilhyock Shim, 2019. "The costs of macroprudential policy," Journal of International Economics, . citation courtesy of
|June 2018||The Costs of Macroprudential Policy|
in NBER International Seminar on Macroeconomics 2018, Jordi Galí and Kenneth West, organizers
|March 2017||Bank Capital Redux: Solvency, Liquidity, and Crisis|
with , , : w23287
What is the relationship between bank capital, the risk of a financial crisis, and its severity? This paper introduces the first comprehensive analysis of the long-run evolution of the capital structure of modern banking using newly constructed data for banks’ balance sheets in 17 countries since 1870. In addition to establishing stylized facts on the changing funding mix of banks, we study the nexus between capital structure and financial instability. We find no association between higher capital and lower risk of banking crisis. However, economies with better capitalized banking systems recover faster from financial crises as credit begins to flow back more readily.