Prof. Anusha Chari of the University of North Carolina on shocks and capital flows in emerging markets
Scientific Sense ®
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The Impact of Macro Prudential Policy on the Global Financial Cycle
The main goal of these macro prudential policies is to prevent the build up of leverage during good times, which then leads to crashes during bad times. So it's to moderate these boom bush cycles that we see in financial systems. While macroprde a policy makes the banking system safer, there are spill overs to other types of float, namely portfolio floas. A spelowers at the extremes the macro prudential stands in onability to the gol financial cycle.
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