Why macropru can end up being procyclical

Danielsson, Jon

; Macrae, Robert; Tsomocos, Dimitrios P.; and Zigrand, Jean-Pierre

(2016) Why macropru can end up being procyclical. VoxEU.

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Discretionary macroprudential policies aim to be countercyclical by adjusting risk-taking across the financial cycle. This column argues that the opposite effect may happen in certain cases. Depending on how regulators measure risk and how they react, the eventual outcome may well be procyclical, with serious unintended consequences.

Item Type	Article
Keywords	macropru,risk-taking,financial cycle,macroprudential,pro cyclical
Departments	Finance Systemic Risk Centre Financial Markets Group
Date Deposited	24 Mar 2017 15:16
URI	https://researchonline.lse.ac.uk/id/eprint/70711

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http://voxeu.org/article/why-macropru-can-end-being-procyclical (Publisher)
http://www.lse.ac.uk/finance/people/faculty/Danielsson.aspx (Author)
http://www.lse.ac.uk/finance/people/faculty/Zigrand.aspx (Author)

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