Synopses & Reviews
Financial crises have plagued economies around the globe for centuries, yet no satisfactory policy solution has been found to significantly reduce the likelihood and severity of these devastating events. Macroprudential policy, the intellectual response to
financial crisis, may provide the solution to this recurrent problem. However, what this means in practice is subject to disagreement - with radicals proposing measures to stablise the flow of credit to households and companies, and others suggesting a more conservative approach focused on the banks. Macroprudential Policy is the first book to provide a coherent and comprehensive coverage of the issues of why, when and how policymakers should intervene.
Barwell brings his considerable experience of working in both a cenral bank and the financial sector to bear in examining the practical justification for the new regime, the institutions of macroprudential policy, the instruments at policymakers' disposal, and a discussion of how policymakers will go about discharging their responsibilities. The book also reviews the economic foundations of macroprudential policy. Conventional macroeconomics is based on assumptions that may work for the analysis of price stability and the conduct of monetary policy, but which more or less rules out the possibility of financial crises. This book introduces an alternative macroeconomics where crises can flourish, identifying the market failures which justify interventions to stabilize the system.
Review
To come
Synopsis
The financial crisis of 2008 is probably the single most important economic event in post-war history. Macroprudential policy is the response to that crisis - a determined attempt to stabilize the financial system. This book explains why it is necessary, who will be responsible for executing this responsibility and how they will go about doing it.
Synopsis
Financial crises have plagued economies around the globe for centuries, yet no satisfactory policy solution has been found to significantly reduce the likelihood and severity of these devastating events. Macroprudential policy, the intellectual response to
financial crisis, may provide the solution to this recurrent problem. However, what this means in practice is subject to disagreement - with radicals proposing measures to stablise the flow of credit to households and companies, and others suggesting a more conservative approach focused on the banks. Macroprudential Policy is the first book to provide a coherent and comprehensive coverage of the issues of why, when and how policymakers should intervene.
Barwell brings his considerable experience of working in both a cenral bank and the financial sector to bear in examining the practical justification for the new regime, the institutions of macroprudential policy, the instruments at policymakers' disposal, and a discussion of how policymakers will go about discharging their responsibilities. The book also reviews the economic foundations of macroprudential policy. Conventional macroeconomics is based on assumptions that may work for the analysis of price stability and the conduct of monetary policy, but which more or less rules out the possibility of financial crises. This book introduces an alternative macroeconomics where crises can flourish, identifying the market failures which justify interventions to stabilize the system.
About the Author
Richard Barwell is currently senior European Economist at RBS Markets; previously he was a senior economist at the Bank of England, working on issues of both monetary and financial stability. However, the opinions and analysis presented in this book represent his personal views and his alone, not those of his current or former employer.
Table of Contents
PART I: THE PRACTICE OF MACROPRUDENTIAL POLICY
1. Preliminaries
2. The Incalculable Costs of Financial Crises
3. Defining Financial Stability
4. Explaining the Failure to Act
5. A Whistle-stop Tour of the Microprudential Reform Agenda
6. The Design of Macroprudential Policy
7. Enter Macroprudential Policy
8. Resilience versus Credit Smoothing
9. A Cost Benefit Analysis of Macroprudential Policy
10. Managing the Contradictions
11. The Institutions of Macroprudential Policy
12. Macroprudential Policy in the United Kingdom
13. It ain't what you do, it's the reason you do it
14. The European Dimension
15. The Global Macroprudential Agenda
16. The Instruments of Macroprudential Policy
17. The Transmission of Policy
18. Capital Surcharges
19. Contingent Capital
20. Regulating the Liquidity Cycle
21. Lender of Last Resort
22. Market Maker of Last Resort
23. The Conduct of Macroprudential Policy
24. Canaries in the Coalmine
25. Macroprudential Policy from 30,000 Feet
26. The Sherlock Holmes Approach to Macroprudential Policy
27. Systemic Stress Tests
28. Macroprudential Regulation of the SIFIs
PART II: THE THEORY OF MACROPRUDENTIAL POLICY
29. The Conventional Wisdom
30. Meet the Conventional Wisdom
31. The Key Pillars of the Classical Edifice
32. Walrasian Auctioneers: Nothing Worth Shouting About
33. The Representative Agent Assumption
34. The Irrelevance of Capital Structure
35. An Unstable System
36. The Mavericks
37. Following the Herd
38. Introducing Institutions
39. Credit Balance Sheets and Asset Prices
40. The Family Tree of Financial Crises
41. The Hysteresis Loop
42. The Liquidity Cycle
43. Final Thoughts
44. Are Financial Markets Worth the Heartache
45. The Way Ahead