scholarly journals PROMULGATION OF THE MACROPRUDENTIAL REGULATION AND THE GUIDELINES FOR THE NBU MACROPRUDENTIAL POLICY

2018 ◽  
pp. 187-208 ◽  
Author(s):  
Victor Kozyuk
Keyword(s):  
Capital Flows ◽  
Commodity Prices ◽  
Macroprudential Policy ◽  
Credit Expansion ◽  
Price Inflation ◽  
Macroprudential Regulation ◽  
National Bank ◽  
Sectoral Policy ◽  
Potential Efficiency ◽  
Specific Profile

Post-crisis spread of macroprudential regulation requires some generalizations and identification of the ways of adapting it to Ukraine. Current consensus about taxonomy and functionality of macroprudential toolkit is corresponded with empirical findings of potential efficiency of such instruments to restrain credit and assets price inflation. At the same time, macroprudential policy may be vulnerable to possibilities of large borrowing abroad and credit activity leakage on unregulated segments of financial system. In the paper it is noted that commodity rich economies constitute a specific profile there macroprudential policy is meant to diminish vulnerability to commodity prices volatility. Macroprudential instruments may help to restrain abnormal credit expansion in non-tradable sectors and bound sectoral credit concentration, thus opening new opportunities for sectoral policy. It is proved that macroprudential policy guidelines for National Bank of Ukraine should be determined by the specifics of implementing macroprudential policy in the environment of capital flows being influenced by the commodity prices, as well as by specific institutional distortions caused by oligarchical banking.

scholarly journals Global Cycles: Capital Flows, Commodities, and Sovereign Defaults, 1815–2015

2016 ◽  
Vol 106 (5) ◽  
pp. 574-580 ◽  
Author(s):  
Carmen M. Reinhart ◽  
Vincent Reinhart ◽  
Christoph Trebesch
Keyword(s):  
Capital Flows ◽  
Historical Data ◽  
Commodity Prices ◽  
Commodity Price ◽  
Capital Inflows ◽  
Data Sources ◽  
Financial Capital ◽  
Global Capital ◽  
Sovereign Defaults ◽  
Global Cycles

Capital flow and commodity cycles have long been connected with economic crises. Sparse historical data, however, has made it difficult to connect their timing. We date turning points in global capital flows and commodity prices across two centuries and provide estimates from alternative data sources. We then document a strong overlap between the ebb and flow of financial capital, the commodity price super-cycle, and sovereign defaults since 1815. The results have implications for today, as many emerging markets are facing a double bust in capital inflows and commodity prices, making them vulnerable to crises.

Financial openness, bank capital flows, and the effectiveness of macroprudential policies

2021 ◽  
pp. 1-32
Author(s):  
Hao Jin ◽  
Chen Xiong
Keyword(s):  
Open Economy ◽  
Capital Flows ◽  
Open Economies ◽  
Small Open Economy ◽  
Empirical Support ◽  
Bank Capital ◽  
Macroprudential Policy ◽  
Funding Sources ◽  
Macroprudential Policies ◽  
Dynamic Stochastic

Abstract This paper quantitatively examines the macroeconomic and welfare effects of macroprudential policies in open economies. We develop a small open economy dynamic stochastic general equilibrium (DSGE) model, where banks choose their funding sources (domestic vs. foreign deposits) and are subject to financial constraints. Our model predicts that banks reduce leverage in response to a macroprudential policy tightening, but increasingly rely on foreign funding. This endogenous shifts of funding composition significantly undermine the stabilizing effect and welfare gains of macroprudential policies. Our results also suggest macroprudential policies are less effective in financially more open economies, and optimal policy should take capital flows into consideration. Finally, we find empirical support for the model predictions in a group of developing and emerging economies.

An investigation on fuel carrier’s price rise impacts on the consumer price inflation in Iran

2021 ◽  
Vol 04 ◽  
Author(s):  
Nima Norouzi
Keyword(s):  
Consumer Price Index ◽  
Commodity Prices ◽  
Gasoline Prices ◽  
Government Control ◽  
Short Term ◽  
Fuel Price ◽  
Price Inflation ◽  
Oil Derivatives ◽  
The Impact

Introduction: Oil is one of the primary commodities of all countries globally and is, in essence, the energy base of all that we know as transportation. Therefore, price fluctuations of derivatives, especially fuel and oil derivatives, are the policymakers’ main concerns because they can cause serious problems, such as inflation in commodity prices. Objective: The impact of fuel carriers’ prices on the consumer price index remains a subject of debate and research. This paper aims to develop a model to define the inflation regime in Iran and then investigate the impact of gasoline and diesel price on the total inflation rate. Method: In this study, using the central bank time series and available data on energy balance and World Bank data banks, a non-linear distributed online delay regression modeling is developed to analyze the relationship between fuel price and essential commodity inflation. Results: The results show that there is an impact of gasoline price on inflation. It does not have much effect in the long term, but diesel can somewhat influence raising prices, which can exacerbate poverty in the community that needs special attention. Conclusion: It was also found that diesel’s price is harmful to the economy because it can stimulate inflation in the long term. However, in the short term, diesel does not cause any significant inflation in the prices. While gasoline prices can have many short-term social effects, this paper suggests that the Iranian government control diesel fuel prices prevent long-term inflation in inflation and consumer price rate.

Capital Flows and Macroprudential Policy

2018 ◽  
pp. 162-177
Author(s):  
Matteo F. Ghilardi ◽  
Shanaka J. Peiris
Keyword(s):  
Capital Flows ◽  
Macroprudential Policy

Increasing Resilience to Large and Volatile Capital Flows—The Role of Macroprudential Policies

Policy Papers ◽  
2017 ◽  
Vol 2017 (20) ◽  
Author(s):  
Keyword(s):  
Capital Flows ◽  
Financial Risk ◽  
National Level ◽  
Financial System ◽  
Institutional Development ◽  
Capital Flow ◽  
Macroprudential Policy ◽  
Financial Systems ◽  
Macroprudential Policies ◽  
Policy Frameworks

Capital flows can deliver substantial benefits for countries, but also have the potential to contribute to a buildup of systemic financial risk. Benefits, such as enhanced investment and consumption smoothing, tend to be greater for countries whose financial and institutional development enables them to intermediate capital flows safely. Post-crisis reforms, including the development of macroprudential policies (MPPs), are helping to strengthen the resilience of financial systems including to shocks from capital flows. The Basel III process has improved the quality and level of capital, reduced leverage, and increased liquid asset holdings in financial systems. Drawing on and complementing such international reforms at the national level, robust macroprudential policy frameworks focused on mitigating systemic risk can improve the capacity of a financial system to safely intermediate cross-border flows. Macroprudential frameworks can play an important role over the capital flow cycle, and help members harness the benefits of capital flows. Introducing macroprudential measures (MPMs) preemptively can increase the resilience of the financial system to aggregate shocks, including those arising from capital inflows, and can contain the build-up of systemic vulnerabilities over time, even when such measures are not designed to limit capital flows. While the risks from capital outflows should be handled primarily by macroeconomic policies, a relaxation of MPMs may assist, as long as buffers are in place, in countering financial stresses from outflows. Capital flow liberalization should be supported by broad efforts to strengthen prudential regulation and supervision, including macroprudential policy frameworks. The Fund has two frameworks to help ensure that its advice on MPPs and policies related to capital flows is consistent and tailored to country circumstances. The frameworks (the Macroprudential framework and the Institutional View on capital flows) are consistent in terms of key principles, including avoiding using MPMs and capital flow management measures (CFMs) as a substitute for necessary macroeconomic adjustment. The appropriate classification of measures is important to ensure targeted advice consistent with the two frameworks. The conceptual framework for the assessment of measures laid out in this paper will assist staff in properly identifying MPMs and measures that are designed to limit capital flows and to reduce systemic financial risk stemming from such flows (CFM/MPMs), and thereby ensure the appropriate application of the Fund’s frameworks, so that staff policy advice is consistent and well targeted. The Fund will continue to develop and share expertise in using MPMs, and integrate these findings into its surveillance and technical assistance, which should contribute to building international understanding and experience on these issues.

scholarly journals The Theoretical Framework of Macroprudential Policy and its Place in the Scheme of Economic Policy

2016 ◽  
Vol 1 (2) ◽  
pp. 22-31
Author(s):  
János Kálmán
Keyword(s):  
Economic Policy ◽  
Historical Context ◽  
Theoretical Framework ◽  
Economic Policies ◽  
Macroprudential Policy ◽  
Macroprudential Regulation ◽  
Regulation And Supervision ◽  
Systemic Risks ◽  
Basic Concepts ◽  
The Stability

Microprudential regulation and supervision – focused on institutional risks – cannot guarantee the stability of the financial system. Therefore special attention should be paid to macroprudential regulation and supervision to address systemic risks. The purpose of this study is to provide the historical context and a theoretical framework for macroprudential regulation and supervision – a new area of economic policy. To this end, we shall examine the causes for the spread of macroprudential policy, its basic concepts, and thirdly, its place within the scheme of economic policies.

scholarly journals Shocks Matter

2020 ◽  
Vol 20 (97) ◽  
Author(s):  
Ruy Lama ◽  
Juan Medina
Keyword(s):  
Open Economy ◽  
Capital Flows ◽  
Small Open Economy ◽  
Policy Instruments ◽  
Output Volatility ◽  
Macroprudential Policy ◽  
Foreign Exchange Intervention ◽  
Leading Role ◽  
Interest Rate Shocks ◽  
Capital Outflows

We study the optimal management of capital flows in a small open economy model with financial frictions and multiple policy instruments. The paper reports two main findings. First, both foreign exchange intervention (FXI) and macroprudential polices are tools complementary to the monetary policy rate that can largely reduce inflation and output volatility in a scenario of capital outflows. Second, the optimal policy mix depends on the underlying shock driving capital flows. FXI takes the leading role in response to foreign interest rate shocks, while macroprudential policy becomes the prominent tool for domestic risk shocks. These results highlight the importance of calibrating the use of multiple instruments according to the underlying shocks that induce shifts in capital flows.

scholarly journals Conflicting Interests and Structural Inflation: TUrkey, 1980-1990

1993 ◽  
Vol 32 (3) ◽  
pp. 303-327 ◽  
Author(s):  
A . Erinc Yeldan
Keyword(s):  
General Equilibrium ◽  
Equilibrium Model ◽  
Computable General Equilibrium ◽  
Aggregate Demand ◽  
General Equilibrium Model ◽  
Equilibrium Analysis ◽  
Nominal Wage ◽  
Credit Expansion ◽  
Price Inflation ◽  
National Output

The paper analyses the structural causes of the recent Turkish inflationary episode. It is argued that monetary policies based on credit tightening alone are not likely to yield the desired target of price stabilisation. Instead. it is hypothesised that the underlying sources of price inflation are affected by income inequality and conflicting claims on national output; and that excessive credit expansion serves mainly to accommodate the inertial inflation thereby originated in the real sector. Given this hypothesis. the paper employs a computable general equilibrium model to investigate four distinct sources of structural inflation for the Turkish economy: (i) the profit/rent inflation based on monopolistic mark-Ups over prime costs; (ii) imported inflation due to the import-dependent structure of the domestic industry; (iii) cost-push and demand inflation due to urban wage claims; and (iv) inflation that results from the fiscal pressures of the government's budget deficits. The general equilibrium model is in the Keynesian tradition in determining the production level by aggregate demand constraints. Furthermore. it accommodates oligopolistic mark-up rules and working capital expenses for price determination. and nominal wage fixity to determine the level of employment. The general equilibrium analysis of the macro economy suggests that. over the analysed period. conflicting claims of various social classes on national output and conflicting rates of intersectoral accumulation warranted by competing producer groups have become important sources of disequilibria in the domestic economy; and that the distributional conflict among socio-economic classes had a direct impact on the formation of price movements.

scholarly journals Macroprudential Regulation versus mopping up after the crash

2020 ◽  
Vol 87 (3) ◽  
pp. 1470-1497 ◽  
Author(s):  
Olivier Jeanne ◽  
Anton Korinek
Keyword(s):  
Financial Crises ◽  
Shadow Banking ◽  
Macroprudential Policy ◽  
Second Best ◽  
Macroprudential Regulation ◽  
Liquidity Provision ◽  
Incentive Effects ◽  
Ex Post ◽  
Ex Ante ◽  
Banking Risk

Abstract How should macroprudential policy be designed when policymakers also have access to liquidity provision tools to manage crises? We show in a tractable model of systemic banking risk that there are three factors at play: first, ex post liquidity provision mitigates financial crises, and this reduces the need for macroprudential policy. In the extreme, if liquidity provision is untargeted and costless or if it completely forestalls crises by credible out-of-equilibrium lending-of-last-resort, there is no role left for macroprudential regulation. Second, however, macroprudential policy needs to consider the ex ante incentive effects of targeted liquidity provision. Third, if shadow banking reduces the effectiveness of macroprudential instruments, it is optimal to commit to less generous liquidity provision as a second-best substitute for macroprudential policy.

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