Bahaj, Saleem;
Foulis, Angus;
(2017)
Macroprudential Policy Under Uncertainty.
International Journal of Central Banking
, 13
(3)
pp. 119-154.
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Abstract
We argue that uncertainty over the impact of macroprudential policy need not make a policymaker more cautious. Our starting point is the classic finding of Brainard that uncertainty over the impact of a policy instrument will make a policymaker less active. This result is challenged in a series of richer models designed to take into account the more complex reality faced by a macroprudential policymaker. We find that asymmetries in policy objectives, the presence of unquantifiable sources of risk, the ability to learn from policy, and private-sector uncertainty over policy objectives can all lead to more active policy.
| Type: | Article |
|---|---|
| Title: | Macroprudential Policy Under Uncertainty |
| Open access status: | An open access version is available from UCL Discovery |
| Publisher version: | https://www.ijcb.org/journal/ijcb17q3a4.htm |
| Language: | English |
| Additional information: | This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10195488 |
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