Leaning Against the Wind : A Cost-Benefit Analysis for an Integrated Policy Framework / Luis Brandao-Marques.
- Washington, D.C. : International Monetary Fund, 2020.
- IMF eLibrary
IMF Working Papers; Working Paper ; No. 20/123
IMF Working Papers
- Government document
1 online resource (59 pages)
- This paper takes a new approach to assess the costs and benefits of using different policy tools-macroprudential, monetary, foreign exchange interventions, and capital flow management-in response to changes in financial conditions. The approach evaluates net benefits of policies using quadratic loss functions, estimating policy effects on the full distribution of future output growth and inflation with quantile regressions. Tightening macroprudential policy dampens downside risks to growth stemming from loose financial conditions, and is beneficial in net terms. By contrast, tightening monetary policy entails net losses, calling for caution in the use of monetary policy to "lean against the wind." These findings hold when policies are used in response to easing global financial conditions. Buying foreign-exchange or tightening capital controls has small net benefits.
- Part of the IMF eLibrary collection.
Description based on print version record.
- Gelos, R. G.
- Other format:
- Print Version: Brandao-Marques, Luis Leaning Against the Wind: A Cost-Benefit Analysis for an Integrated Policy Framework
- 1513549650 :
- Publisher Number:
- 10.5089/9781513549651.001 doi
- Access Restriction:
- Restricted for use by site license.
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