Title Capital flows, financial intermediation and macroprudential policies / Matteo F. Ghilardi and Shanaka J. Peiris

Published [Washington, D.C.] : International Monetary Fund, ©2014

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Description 1 online resource (31 pages) : color illustrations Series IMF working paper ; WP/14/157 IMF working paper ; WP/14/157. Contents Cover; Table of Contents; I. Introduction; II. Background; Figures; Figure 1. Non-Residents Non-FDI Inflows to Asia; Figure 2. Net Asia Capital Flows; Figure 3. EM Asia: Response to Increase in Net Capital Inflows; Figure 4. EM Asia: Response to Real Cost of Equity; Figure 5. EM Asia: Response to Credit to Private Sector; III. Literature Review; IV. The Model; A. Households; B. The Banking Sector; C. Non-Financial Firms; D. Central Bank; E. Equilibrium and Foreign Asset Accumulation; V. Macroprudential Policy; VI. Calibration; VII. The Role of Macroprudential Policy in Reducing Procyclicality TablesTable 1. Calibration; Figure 6. Impulse Response Functions to a Foreign Borrowing Shock; Figure 7. Impulse Response Functions to a Bank Capital Shock; Figure 8. Impulse Response Functions to a Technology Shock; Figure 9. Impulse Response Functions to a Monetary Policy Shock; VIII. Macroprudential and Monetary Policy Interactions; Figure 10. Impulse Response Functions to an Asset Price Shock; Table 2. Parameters of the Policy Rule; Table 3. Performance of Different Taylor Rules; IX. Conclusion; References Summary This paper develops an open-economy DSGE model with an optimizing banking sector to assess the role of capital flows, macro-financial linkages, and macroprudential policies in emerging Asia. The key result is that macro-prudential measures can usefully complement monetary policy. Countercyclical macroprudential polices can help reduce macroeconomic volatility and enhance welfare. The results also demonstrate the importance of capital flows and financial stability for business cycle fluctuations as well as the role of supply side financial accelerator effects in the amplification and propagation of shocks. --Abstract Notes "August 2014"--Page 2 of pdf "Asia Pacific Department, Research Department and Strategy, Policy and Review Department"--Page 2 of pdf Bibliography Includes bibliographical references (pages 28-30) Notes Online resource; title from pdf title page (IMF.org Web site, viewed on August 25, 2014) Subject Capital movements -- Asia -- Econometric models Intermediation (Finance) -- Asia -- Econometric models Banks and banking -- Risk management -- Asia -- Econometric models Financial risk management -- Asia -- Econometric models Capital movements -- Econometric models Intermediation (Finance) -- Econometric models Asia Form Electronic book Author Peiris, Shanaka J. (Shanaka Jayanath), 1975- author. International Monetary Fund. Asia and Pacific Department, issuing body. International Monetary Fund. Research Department, issuing body. International Monetary Fund. Strategy, Policy, and Review Department, issuing body. ISBN 9781498377126 1498377122

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