Optimal macroprudential policy and asset price bubbles /

Optimal macroprudential policy and asset price bubbles /

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Bibliographic Details
Author / Creator:Biljanovska, Nina, author.
Imprint:[Washington, D.C.] : International Monetary Fund, [2019]
©2019
Description:1 online resource (45 pages)
Language:English
Series:IMF Working Paper ; WP/19/184
IMF working paper ; WP/19/184.
Subject:
Credit -- Econometric models.
Stocks -- Prices -- Econometric models.
Credit -- Econometric models.
Format: E-Resource Book
URL for this record:http://pi.lib.uchicago.edu/1001/cat/bib/12510322
Hidden Bibliographic Details
Other authors / contributors:Gornicka, Lucyna, author.
Vardoulakis, Alexandros, author.
International Monetary Fund, issuing body.
ISBN:1513512684
9781513512686
Notes:Print version record.
Summary:An asset bubble relaxes collateral constraints and increases borrowing by credit-constrained agents. At the same time, as the bubble deflates when constraints start binding, it amplifies downturns. We show analytically and quantitatively that the macroprudential policy should optimally respond to building asset price bubbles non-monotonically depending on the underlying level of indebtedness. If the level of debt is moderate, policy should accommodate the bubble to reduce the incidence of a binding collateral constraint. If debt is elevated, policy should lean against the bubble more aggressively to mitigate the pecuniary externalities from a deflating bubble when constraints bind.
Other form:Print version: Biljanovska, Nina. Optimal Macroprudential Policy and Asset Price Bubbles. Washington, D.C. : International Monetary Fund, ©2019 9781513511078

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