scholarly journals Macroprudential Regulation versus mopping up after the crash

2020 ◽  
Vol 87 (3) ◽  
pp. 1470-1497 ◽  
Author(s):  
Olivier Jeanne ◽  
Anton Korinek
Keyword(s):  
Financial Crises ◽  
Shadow Banking ◽  
Macroprudential Policy ◽  
Second Best ◽  
Macroprudential Regulation ◽  
Liquidity Provision ◽  
Incentive Effects ◽  
Ex Post ◽  
Ex Ante ◽  
Banking Risk

Abstract How should macroprudential policy be designed when policymakers also have access to liquidity provision tools to manage crises? We show in a tractable model of systemic banking risk that there are three factors at play: first, ex post liquidity provision mitigates financial crises, and this reduces the need for macroprudential policy. In the extreme, if liquidity provision is untargeted and costless or if it completely forestalls crises by credible out-of-equilibrium lending-of-last-resort, there is no role left for macroprudential regulation. Second, however, macroprudential policy needs to consider the ex ante incentive effects of targeted liquidity provision. Third, if shadow banking reduces the effectiveness of macroprudential instruments, it is optimal to commit to less generous liquidity provision as a second-best substitute for macroprudential policy.

scholarly journals Efficient Bailouts?

2016 ◽  
Vol 106 (12) ◽  
pp. 3607-3659 ◽  
Author(s):  
Javier Bianchi
Keyword(s):  
Financial Crisis ◽  
Moral Hazard ◽  
Risk Taking ◽  
Equilibrium Model ◽  
Financial Crises ◽  
Balance Sheet ◽  
Ex Post ◽  
Ex Ante ◽  
Systemic Crisis ◽  
Increase In Risk

We develop a quantitative equilibrium model of financial crises to assess the interaction between ex post interventions in credit markets and the buildup of risk ex ante. During a systemic crisis, bailouts relax balance sheet constraints and mitigate the severity of the recession. Ex ante, the anticipation of such bailouts leads to an increase in risk-taking, making the economy more vulnerable to a financial crisis. We find that moral hazard effects are limited if bailouts are systemic and broad-based. If bailouts are idiosyncratic and targeted, however, this makes the economy significantly more exposed to financial crises. (JEL E23, E32, E44, E63, G01, G21, G28)

Banking Panics as Endogenous Disasters and the Welfare Gains from Macroprudential Policy

2020 ◽  
Vol 110 ◽  
pp. 463-469
Author(s):  
Mark Gertler ◽  
Nobuhiro Kiyotaki ◽  
Andrea Prestipino
Keyword(s):  
Financial Crises ◽  
Welfare Effects ◽  
Macroeconomic Model ◽  
Statistical Relationship ◽  
Macroprudential Policy ◽  
Welfare Gains ◽  
Credit Booms ◽  
Ex Post ◽  
Banking Panics ◽  
Credit Boom

We study the welfare effects of macroprudential policy in a macroeconomic model of banking instability. Banking panics are endogenous economic disasters caused by banks' excessive leverage during credit booms. The model matches the frequency and severity of banking panics and the statistical relationship between panics and credit booms. A simple countercyclical macroprudential rule can achieve non-negligible welfare gains. These gains rise substantially when the run probability increases during a credit boom and, ex post, if a run is actually avoided. In a model without panics in which financial crises are driven by fundamentals only, the gains are much more limited.

scholarly journals Macroprudential Regulation — The Missing Policy Pillar

2010 ◽  
Vol 211 ◽  
pp. R3-R16 ◽  
Author(s):  
E. Philip Davis ◽  
Dilruba Karim
Keyword(s):  
Financial Crises ◽  
Financial System ◽  
Collective Behaviour ◽  
Financial Instability ◽  
Macroprudential Policy ◽  
Related Research ◽  
Macroprudential Regulation ◽  
Design And Implementation ◽  
Aggregate Risk ◽  
Made In

The recent Sub-Prime crisis has prompted a close focus on the causes of financial instability as well as the issue of whether it can be prevented. There is a growing realisation that the Sub-Prime crisis, although having some important unique features, also had a number of generic aspects in common with earlier financial crises, of which a large number have been seen in recent decades. Accordingly, the crisis has prompted a debate about macroprudential policy, which focuses on the financial system as a whole, treating aggregate risk as endogenous with regard to collective behaviour of institutions. Our survey shows that a great deal of progress has been made in ‘macroprudential surveillance’ and related research on causes and predictors of crises. Much less progress has been made in ‘macroprudential regulation’, the design and implementation of policies to prevent or mitigate threatened crises.

Ex-Ante and Ex-Post Performance of Optimal REIT Portfolios

CFA Digest ◽  
2003 ◽  
Vol 33 (3) ◽  
pp. 8-9
Author(s):  
Ann C. Logue
Keyword(s):  
Ex Post ◽  
Ex Ante

Erreurs de prévision ex ante et ex post

1993 ◽  
Vol 108 (2) ◽  
pp. 135-138
Author(s):  
Pierre Malgrange ◽  
Silvia Mira d'Ercole
Keyword(s):  
Ex Post ◽  
Ex Ante

Crime and Punishment

2017 ◽  
Author(s):  
Richard Adelstein
Keyword(s):  
Criminal Liability ◽  
Court Case ◽  
Efficient Allocation ◽  
Two Stage ◽  
Crime And Punishment ◽  
The Past ◽  
Ex Post ◽  
Ex Ante ◽  
Supreme Court Case

This chapter elaborates the operation of criminal liability by closely considering efficient crimes and the law’s stance toward them, shows how its commitment to proportional punishment prevents the probability scaling that systemically efficient allocation requires, and discusses the procedures that determine the actual liability prices imposed on offenders. Efficient crimes are effectively encouraged by proportional punishment, and their nature and implications are examined. But proportional punishment precludes probability scaling, and induces far more than the systemically efficient number of crimes. Liability prices that match the specific costs imposed by the offender at bar are sought through a two-stage procedure of legislative determination of punishment ranges ex ante and judicial determination of exact prices ex post, which creates a dilemma: whether to price crimes accurately in the past or deter them accurately in the future. An illustrative Supreme Court case bringing all these themes together is discussed in conclusion.

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