Informality, Frictions, and Macroprudential Policy
Title | Informality, Frictions, and Macroprudential Policy PDF eBook |
Author | Moez Ben Hassine |
Publisher | International Monetary Fund |
Pages | 37 |
Release | 2019-11-27 |
Genre | Business & Economics |
ISBN | 1498320856 |
We analyze the effects of macroprudential policies through the lens of an estimated dynamic stochastic general equilibrium (DSGE) model tailored to developing markets. In particular, we explicitly introduce informality in the labor and goods markets within a small open economy embedding financial frictions, nominal and real rigidities, labor search and matching, and an explicit banking sector. We use the estimated version of the model to run welfare analysis under optimized monetary and macroprudential rules. Results show that although informality reduces the efficiency of macroprudential policies following a convex fashion, combining the latter with an inflation targeting objective could be beneficial.
Monetary Policy and Macroprudential Regulation with Financial Frictions
Title | Monetary Policy and Macroprudential Regulation with Financial Frictions PDF eBook |
Author | Pierre-Richard Agenor |
Publisher | MIT Press |
Pages | 601 |
Release | 2020-11-10 |
Genre | Business & Economics |
ISBN | 0262359421 |
An integrated analysis of how financial frictions can be accounted for in macroeconomic models built to study monetary policy and macroprudential regulation. Since the global financial crisis, there has been a renewed effort to emphasize financial frictions in designing closed- and open-economy macroeconomic models for monetary and macroprudential policy analysis. Drawing on the extensive literature of the past decade as well as his own contributions, in this book Pierre-Richard Age&́nor provides a unified set of theoretical and quantitative macroeconomic models with financial frictions to explore issues that have emerged in the wake of the crisis. These include the need to understand better how the financial system amplifies and propagates shocks originating elsewhere in the economy; how it can itself be a source of aggregate fluctuations; the extent to which central banks should account for financial stability considerations in the conduct of monetary policy; whether national central banks and regulators should coordinate their policies to promote macroeconomic and financial stability; and how much countercyclical macroprudential policies should be coordinated at the international level to mitigate financial spillovers across countries.
Informality, Frictions, and Macroprudential Policy
Title | Informality, Frictions, and Macroprudential Policy PDF eBook |
Author | Moez Ben Hassine |
Publisher | International Monetary Fund |
Pages | 37 |
Release | 2019-12-27 |
Genre | Business & Economics |
ISBN | 1513522272 |
We analyze the effects of macroprudential policies through the lens of an estimated dynamic stochastic general equilibrium (DSGE) model tailored to developing markets. In particular, we explicitly introduce informality in the labor and goods markets within a small open economy embedding financial frictions, nominal and real rigidities, labor search and matching, and an explicit banking sector. We use the estimated version of the model to run welfare analysis under optimized monetary and macroprudential rules. Results show that although informality reduces the efficiency of macroprudential policies following a convex fashion, combining the latter with an inflation targeting objective could be beneficial.
Macroprudential Rules and Monetary Policy when Financial Frictions Matter
Title | Macroprudential Rules and Monetary Policy when Financial Frictions Matter PDF eBook |
Author | Jeannine N. Bailliu |
Publisher | |
Pages | 37 |
Release | 2012 |
Genre | Financial crises |
ISBN |
Drivers of Financial Access: the Role of Macroprudential Policies
Title | Drivers of Financial Access: the Role of Macroprudential Policies PDF eBook |
Author | Corinne Deléchat |
Publisher | International Monetary Fund |
Pages | 41 |
Release | 2020-05-29 |
Genre | Business & Economics |
ISBN | 1513545671 |
This study analyzes the drivers of the use of formal vs. informal financial services in emerging and developing countries using the 2017 Global FINDEX data. In particular, we investigate whether individuals’ choice of financial services correlates with macro-financial and macro-structural policies and conditions, in addition to individual and country characteristics. We start our analysis on middle and low-income countries, and then zoom in on sub-Saharan Africa, currently the region that most relies on informal financial services, and which has the largest uptake of mobile banking. We find robust evidence of an association between macroprudential policies and individuals’ choice of financial access after controlling for personal and country-level characteristics. In particular, macroprudential policies aimed at controlling credit supply seem to be associated with greater resort to informal financial services compared with formal, bank-based access. This highlights the importance for central bankers and financial sector regulators to consider the potential spillovers of monetary policy and financial stability measures on financial inclusion.
The Global Informal Workforce
Title | The Global Informal Workforce PDF eBook |
Author | International Monetary Fund |
Publisher | International Monetary Fund |
Pages | 414 |
Release | 2021-07-23 |
Genre | Business & Economics |
ISBN | 1513575910 |
The Global Informal Workforce is a fresh look at the informal economy around the world and its impact on the macroeconomy. The book covers interactions between the informal economy, labor and product markets, gender equality, fiscal institutions and outcomes, social protection, and financial inclusion. Informality is a widespread and persistent phenomenon that affects how fast economies can grow, develop, and provide decent economic opportunities for their populations. The COVID-19 pandemic has helped to uncover the vulnerabilities of the informal workforce.
Macroprudential Policy and Labor Market Dynamics in Emerging Economies
Title | Macroprudential Policy and Labor Market Dynamics in Emerging Economies PDF eBook |
Author | Alan Finkelstein Shapiro |
Publisher | International Monetary Fund |
Pages | 48 |
Release | 2015-04-03 |
Genre | Business & Economics |
ISBN | 1475563647 |
Emerging economies have high shares of self-employed individuals running owner-only firms who, in contrast to many salaried firms, have little access to formal financing and therefore rely on informal financing (input credit) from other firms. We build a small open economy real business cycle model with labor and financial market frictions where formal credit markets, informal credit, and the structure of the labor market interact. The model successfully replicates the cyclical behavior of sectoral employment, formal credit, and the main macroeconomic aggregates in emerging economies. We show that a countercyclical macroprudential policy that reduces formal credit fluctuations has positive though quantitatively limited effects on consumption and output volatility, but generates larger unemployment fluctuations in response to productivity shocks; the same policy increases labor market and aggregate volatility in response to net worth shocks. The link between input credit and the labor market structure---key for capturing the cyclical dynamics of labor and credit markets in the data---plays a crucial role for these results.