Macroeconomic Fragility: Optimal Time-Consistent Macroprudential Policy

Can credit frictions -- modeled as a limit on households' borrowing capacity -- reproduce some of the quantitative features we observe during credit booms and busts? What type of time-consistent macro-prudential regulation can be implemented in order to reduce and/or eliminate the effect of credit frictions and therefore reduce the frequency and severity of such crisis? Javier Bianchi attempts at answering these questions using a standard business cycle model where households' borrowing capacity is capped at a certain fraction of households' asset level.

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Видео Macroeconomic Fragility: Optimal Time-Consistent Macroprudential Policy канала Becker Friedman Institute University of Chicago