Macro-prudential policy: a quantitative approach

This course studies macroprudential policy in quantitative dynamic general equilibrium models with collateral constraints, covering theoretical foundations, optimal policy design and evaluation, and implementation hurdles.

The arguments and findings reviewed in the course suggest that macroprudential policy holds the promise of becoming a powerful tool for reducing the severity and frequency of financial crises and increasing social welfare.

They also suggest, however, that macroprudential policy faces serious implementation challenges that can undermine its effectiveness significantly, and that careful evaluation of candidate policies with adequate quantitative tools is critical for overcoming these challenges.