Mitigating the Deadly Embrace in Financial Cycles [electronic resource] : Countercyclical Buffers and Loan-to-Value Limits / Jaromir Benes.
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TextSeries: IMF Working PapersPublication details: Washington, D.C. : International Monetary Fund, 2016Description: 1 online resource (26 p.)ISBN: 148432305X :ISSN: 1018-5941Subject(s): Business Cycles | Credit Booms | Credit Demand | Household Credit | Housing PricesAdditional physical formats: Print Version:: Mitigating the Deadly Embrace in Financial Cycles: Countercyclical Buffers and Loan-to-Value LimitsOnline resources: IMF e-Library | IMF Book Store Abstract: This paper presents a new version of MAPMOD (Mark II) to study the effectiveness of macroprudential regulations. We extend the original model by explicitly modeling the housing market. We show how household demand for housing, house prices, and bank mortgages are intertwined in what we call a deadly embrace. Without macroprudential policies, this deadly embrace naturally leads to housing boom and bust cycles, which can be very costly for the economy, as shown by the Global Financial Crisis of 2008-09.
This paper presents a new version of MAPMOD (Mark II) to study the effectiveness of macroprudential regulations. We extend the original model by explicitly modeling the housing market. We show how household demand for housing, house prices, and bank mortgages are intertwined in what we call a deadly embrace. Without macroprudential policies, this deadly embrace naturally leads to housing boom and bust cycles, which can be very costly for the economy, as shown by the Global Financial Crisis of 2008-09.
Description based on print version record.
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