BIS paper weighs economic impact of macro-prudential policy
Cutting the LTV ratio leads to reduced output in emerging markets, authors find
Research published by the Bank for International Settlements seeks to quantify the effects of changes in maximum loan-to-value (LTV) ratios on output and inflation in 56 economies.
The researchers base their analysis on quarterly data for both advanced economies (AEs) and emerging market economies (EMEs), from the first quarter 1990 to the second quarter 2012. They find that over a four-year horizon, a 10-percentage point decrease in the maximum LTV ratio leads, on average, to a 1.1% reduction
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