Co-operation matters for macro-prudential impact – BIS paper
Gains from co-operation can be large but asymmetric benefits could create political economy problems, authors say
Countries can achieve “sizeable” benefits by co-ordinating their macro-prudential policies but may struggle politically to find common ground, according to a working paper published on June 8 by the Bank for International Settlements (BIS).
A team of economists from the BIS, Centre for Economic Policy Research and University of Manchester set up a core-periphery general equilibrium model to test some simplified forms of macro-prudential policy.
They find that, in the presence of financial
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