Policies to mitigate procyclicality /
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| Imprint: | [Washington, D.C.] : International Monetary Fund, 2009. |
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| Description: | 1 online resource (25 pages) |
| Language: | English |
| Series: | IMF staff position note ; SPN/09/09 IMF staff position note ; SPN/09/09. |
| Subject: | |
| Format: | E-Resource Book |
| URL for this record: | http://pi.lib.uchicago.edu/1001/cat/bib/12500153 |
| Summary: | This paper examines the reasons for this, specifically focusing on regulations or market practices that can accentuate economic cycles. Although recognizing various practical limitations, new policy responses are identified that could help to mitigate procyclicality. Although economic cycles are taken as a natural and recurring phenomenon, there are ways in which private sector behavior and practices, prudential regulation, and macroeconomic policies can act to magnify such cycles. A key challenge for policymakers will be to counter the exacerbating effects of prudential regulations while at the same time keeping the risk-based decision-making processes that are increasingly used in the private sector. Procyclicality is also embedded in credit risk management systems and guidelines, because the inputs (default probabilities, loss severities, default correlations, and credit ratings) tend to vary positively with economic cycles. Credit ratings are supposed to be assigned on a "through-the-cycle" basis, and not according to transitory fluctuations in credit quality. |
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| Item Description: | Title from PDF title page (IMF Web site, viewed Apr. 3, 2012). "Prepared by the Monetary and Capital Markets Department." "May 7, 2009." |
| Physical Description: | 1 online resource (25 pages) |
| Bibliography: | Includes bibliographical references. |
| ISBN: | 9781589068483 1589068483 1462340083 9781462340088 1451987528 9781451987522 1462370713 9781462370719 |