Macroprudential Policies in a Global Perspective
This paper analyzes the case for the international coordination of macroprudential policies in the context of a simple theoretical framework. Both domestic macroprudential policies and prudential capital controls have international spillovers through their impact on capital flows. The uncoordinated use of macroprudential policies may lead to a "capital war" that depresses global interest rates. International coordination of macroprudential policies is not warranted, however, unless there is unemployment in some countries. There is scope for Pareto-improving international policy coordination when one part of the world is in a liquidity trap while the rest of the world accumulates reserves for prudential reasons.
Paper presented at the 2013 Asia Economic Policy Conference, Federal Reserve bank of San Francisco, November 3-5 2013. A preliminary version of this paper was presented at the BOJ-IMES Conference, "Financial Crises and the Global Financial System" at the Bank of Japan, May 29-30, 2013. I thank the participants at these conferences for their comments, especially my discussants Guillermo Calvo, Jonathan Ostry and Eric Santor. I also thank Anton Korinek for his comments on a previous draft. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Jeanne, Olivier, 2013. "Macroprudential policies in a global perspective," Proceedings, Federal Reserve Bank of San Francisco, issue Nov, pages 1-38. citation courtesy of