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Macroprudential Policy and Labor Market Dynamics in Emerging Economies

2015-04-03 Business & Economics
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Release : 2015-04-03
Genre : Business & Economics
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Book Rating : 662/5 ( reviews)

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Book Synopsis Macroprudential Policy and Labor Market Dynamics in Emerging Economies by : Alan Finkelstein Shapiro

Download or read book Macroprudential Policy and Labor Market Dynamics in Emerging Economies written by Alan Finkelstein Shapiro. This book was released on 2015-04-03. Available in PDF, EPUB and Kindle. Book excerpt: Emerging economies have high shares of self-employed individuals running owner-only firms who, in contrast to many salaried firms, have little access to formal financing and therefore rely on informal financing (input credit) from other firms. We build a small open economy real business cycle model with labor and financial market frictions where formal credit markets, informal credit, and the structure of the labor market interact. The model successfully replicates the cyclical behavior of sectoral employment, formal credit, and the main macroeconomic aggregates in emerging economies. We show that a countercyclical macroprudential policy that reduces formal credit fluctuations has positive though quantitatively limited effects on consumption and output volatility, but generates larger unemployment fluctuations in response to productivity shocks; the same policy increases labor market and aggregate volatility in response to net worth shocks. The link between input credit and the labor market structure---key for capturing the cyclical dynamics of labor and credit markets in the data---plays a crucial role for these results.

Macroprudential Policy and Labor Market Dynamics in Emerging Economies

2015-04-03 Business & Economics
Download Macroprudential Policy and Labor Market Dynamics in Emerging Economies PDF Online Free

Author :
Release : 2015-04-03
Genre : Business & Economics
Kind : eBook
Book Rating : 647/5 ( reviews)

GET EBOOK


Book Synopsis Macroprudential Policy and Labor Market Dynamics in Emerging Economies by : Alan Finkelstein Shapiro

Download or read book Macroprudential Policy and Labor Market Dynamics in Emerging Economies written by Alan Finkelstein Shapiro. This book was released on 2015-04-03. Available in PDF, EPUB and Kindle. Book excerpt: Emerging economies have high shares of self-employed individuals running owner-only firms who, in contrast to many salaried firms, have little access to formal financing and therefore rely on informal financing (input credit) from other firms. We build a small open economy real business cycle model with labor and financial market frictions where formal credit markets, informal credit, and the structure of the labor market interact. The model successfully replicates the cyclical behavior of sectoral employment, formal credit, and the main macroeconomic aggregates in emerging economies. We show that a countercyclical macroprudential policy that reduces formal credit fluctuations has positive though quantitatively limited effects on consumption and output volatility, but generates larger unemployment fluctuations in response to productivity shocks; the same policy increases labor market and aggregate volatility in response to net worth shocks. The link between input credit and the labor market structure---key for capturing the cyclical dynamics of labor and credit markets in the data---plays a crucial role for these results.

Macroprudential Policy and Labor Market Dynamics in Latin America

2015
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Release : 2015
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Kind : eBook
Book Rating : /5 ( reviews)

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Book Synopsis Macroprudential Policy and Labor Market Dynamics in Latin America by : Alan Finkelstein Shapiro

Download or read book Macroprudential Policy and Labor Market Dynamics in Latin America written by Alan Finkelstein Shapiro. This book was released on 2015. Available in PDF, EPUB and Kindle. Book excerpt: This paper builds a small open economy business cycle model with labor and financial market frictions that incorporates frictional, endogenous self-employment entry and a link between formal credit markets, informal credit, and the labor market. The paper then shows that the model is consistent with the cyclical behavior of both labor and credit markets in Latin American economies and analyzes the aggregate consequences of cyclical macroprudential policy for labor market and aggregate dynamics. It is found that a policy that reduces credit fluctuations successfully reduces consumption, investment, and output volatility, but generates substantially higher unemployment fluctuations in response to productivity shocks. Moreover, the policy increases the volatility of all these variables in response to net worth shocks. The link between formal credit markets, input credit between firms, and self-employment plays a key role in explaining the adverse impact of macroprudential policy on unemployment dynamics. The findings point to potential gains from policy complementarities between macroprudential regulation and active labor market interventions over the business cycle.

Informality, Frictions, and Macroprudential Policy

2019-11-27 Business & Economics
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Release : 2019-11-27
Genre : Business & Economics
Kind : eBook
Book Rating : 856/5 ( reviews)

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Book Synopsis Informality, Frictions, and Macroprudential Policy by : Moez Ben Hassine

Download or read book Informality, Frictions, and Macroprudential Policy written by Moez Ben Hassine. This book was released on 2019-11-27. Available in PDF, EPUB and Kindle. Book excerpt: We analyze the effects of macroprudential policies through the lens of an estimated dynamic stochastic general equilibrium (DSGE) model tailored to developing markets. In particular, we explicitly introduce informality in the labor and goods markets within a small open economy embedding financial frictions, nominal and real rigidities, labor search and matching, and an explicit banking sector. We use the estimated version of the model to run welfare analysis under optimized monetary and macroprudential rules. Results show that although informality reduces the efficiency of macroprudential policies following a convex fashion, combining the latter with an inflation targeting objective could be beneficial.

An Overview of Macroprudential Policy Tools

2014-12-11 Business & Economics
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Release : 2014-12-11
Genre : Business & Economics
Kind : eBook
Book Rating : 112/5 ( reviews)

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Book Synopsis An Overview of Macroprudential Policy Tools by : Mr.Stijn Claessens

Download or read book An Overview of Macroprudential Policy Tools written by Mr.Stijn Claessens. This book was released on 2014-12-11. Available in PDF, EPUB and Kindle. Book excerpt: Macroprudential policies – caps on loan to value ratios, limits on credit growth and other balance sheets restrictions, (countercyclical) capital and reserve requirements and surcharges, and Pigouvian levies – have become part of the policy paradigm in emerging markets and advanced countries alike. But knowledge is still limited on these tools. Macroprudential policies ought to be motivated by market failures and externalities, but these can be hard to identify. They can also interact with various other policies, such as monetary and microprudential, raising coordination issues. Some countries, especially emerging markets, have used these tools and analyses suggest that some can reduce procyclicality and crisis risks. Yet, much remains to be studied, including tools’ costs ? by adversely affecting resource allocations; how to best adapt tools to country circumstances; and preferred institutional designs, including how to address political economy risks. As such, policy makers should move carefully in adopting tools.

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