BIS paper finds macro-prudential impact varies during cycle
Tightening more effective when used against strong credit growth
The effectiveness of macro-prudential policy depends on an economy's position in the housing cycle, according to a working paper published this week by the Bank for International Settlements (BIS).
Authored by Chris McDonald, who was on secondment from the Reserve Bank of New Zealand at the time of writing, When is macroprudential policy effective? finds tighter macro-prudential measures work best when credit is expanding fast and house prices are rising.
McDonald studies the effects of loan-to
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