The fatal flaw in macropru: it ignores political risk
Danielsson, J.
& Macrae, R.
(2016).
The fatal flaw in macropru: it ignores political risk.
VoxEU,
& Macrae, R.
(2016).
The fatal flaw in macropru: it ignores political risk.
VoxEU,
Political risk is a major cause of systemic financial risk. This column argues that both the integrity and the legitimacy of macroprudential policy, or ‘macropru’, depends on political risk being included with other risk factors. Yet it is usually excluded from macropru, and that could be a fatal flaw.