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Why macropru can end up being procyclical

Danielsson, Jon and Macrae, Robert and Tsomocos, Dimitrios P. and Zigrand, Jean-Pierre (2016) Why macropru can end up being procyclical. VoxEU.org (15 Dec 2016). Opinion Piece.

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Abstract

Discretionary macroprudential policies aim to be countercyclical by adjusting risk-taking across the financial cycle. This column argues that the opposite effect may happen in certain cases. Depending on how regulators measure risk and how they react, the eventual outcome may well be procyclical, with serious unintended consequences.

Item Type: Website (Opinion Piece)
Official URL: http://www.voxeu.org/
Additional Information: © 2016 VoxEU.org
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
JEL classification: E - Macroeconomics and Monetary Economics > E0 - General
Sets: Departments > Finance
Research centres and groups > Systemic Risk Centre
Research centres and groups > Financial Markets Group (FMG)
Date Deposited: 24 Mar 2017 15:16
Last Modified: 24 Mar 2017 15:17
URI: http://eprints.lse.ac.uk/id/eprint/70711

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