Paper warns macro-prudential tools can have ‘blunt’ impact
Working paper sees potential for macro-prudential tools to have ‘aggregate impact
It is possible for a macro-prudential instrument that targets only a specific sector to have an "aggregate impact", according to a working paper published by the Bank of Japan.
In Is macro-prudential policy instrument blunt?, Katsurako Sonoday and Nao Sudoz analyse the use of an instrument called ‘quantitative restriction' in Japan from the 1970s to the 1990s.
The measure "explicitly requested banks to limit their lending exclusively to economic activities related to the real estate industry"
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