Publication:
The Conceptual Foundations of Macroprudential Policy : A Roadmap

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dc.contributor.authorde la Torre, Augusto
dc.contributor.authorIze, Alain
dc.date.accessioned2013-10-02T16:11:00Z
dc.date.available2013-10-02T16:11:00Z
dc.date.issued2013-08
dc.description.abstractThis paper explores post-Lehman macroprudential regulation by interacting two types of market failures (principal-agent and collective action) with two cognition modes (unconstrained and constrained) in the context of aggregate risk. Four paradigms with orthogonal policy justifications are identified. In the first time consistency paradigm, regulation offsets the moral hazard implications of efficient but time inconsistent post-crisis bailouts. In the second dynamic alignment paradigm, it protects unsophisticated market participants by maintaining principal-agent incentives continuously aligned in the face of aggregate shocks. In the third collective action paradigm, regulation arises in response to the socially inefficient yet rational financial instability resulting from uninternalized externalities. The fourth collective cognition paradigm is grounded on the need to temper the mood swings that arise from bounded rationality or severe cognitive frictions in a rapidly changing, complex and uncertain world. These four rationales give rise to important tensions and trade-offs in the design of macroprudential policy.en
dc.identifierhttp://documents.worldbank.org/curated/en/2013/08/18112903/rhyme-reason-macroprudential-policy-four-guideposts-find-your-bearings-rhyme-reason-macroprudential-policy-four-guideposts-find-your-bearings
dc.identifier.doi10.1596/1813-9450-6576
dc.identifier.urihttps://hdl.handle.net/10986/16009
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 6576
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectACCELERATOR
dc.subjectADVANCED ECONOMIES
dc.subjectADVERSE EFFECTS
dc.subjectADVERSE IMPACT
dc.subjectADVERSE SELECTION
dc.subjectAGENCY COSTS
dc.subjectARBITRAGE
dc.subjectASSET PRICE
dc.subjectASSET PRICES
dc.subjectBAILOUTS
dc.subjectBANK CREDIT
dc.subjectBANK FAILURES
dc.subjectBANK OF ENGLAND
dc.subjectBANK PANICS
dc.subjectBANK REGULATION
dc.subjectBANKING CRISES
dc.subjectBANKING CRISIS
dc.subjectBANKING PANICS
dc.subjectBORROWING
dc.subjectBOUNDED RATIONALITY
dc.subjectBUSINESS CYCLE
dc.subjectBUSINESS CYCLES
dc.subjectCAPITAL REGULATION
dc.subjectCAPITAL REQUIREMENTS
dc.subjectCENTRAL BANKS
dc.subjectCOLLATERAL
dc.subjectCOLLECTIVE ACTION
dc.subjectCOLLECTIVE ACTION PROBLEMS
dc.subjectCOMMERCIAL BANKING
dc.subjectCOMPARATIVE ADVANTAGE
dc.subjectCOMPARATIVE ADVANTAGES
dc.subjectCOMPENSATION SYSTEMS
dc.subjectCONSUMER PROTECTION
dc.subjectCOORDINATION FAILURES
dc.subjectCREDIT EXPANSION
dc.subjectCREDIT POLICIES
dc.subjectCREDITORS
dc.subjectDEBT
dc.subjectDEPOSIT
dc.subjectDEPOSIT INSURANCE
dc.subjectDEPOSITORS
dc.subjectDEVELOPMENT BANK
dc.subjectDEVELOPMENT POLICY
dc.subjectDISCLOSURE REQUIREMENTS
dc.subjectDRIVERS
dc.subjectECONOMETRICS
dc.subjectECONOMIC PERFORMANCE
dc.subjectECONOMIC RESEARCH
dc.subjectECONOMIC SURVEYS
dc.subjectECONOMIC THEORY
dc.subjectECONOMICS
dc.subjectEXCESS LIQUIDITY
dc.subjectEXPECTED UTILITY
dc.subjectEXPOSURE
dc.subjectEXTERNALITIES
dc.subjectEXTERNALITY
dc.subjectFAILURE RESOLUTION
dc.subjectFEDERAL RESERVE
dc.subjectFEDERAL RESERVE BANK
dc.subjectFINANCIAL AUTHORITIES
dc.subjectFINANCIAL CONTAGION
dc.subjectFINANCIAL CONTRACTS
dc.subjectFINANCIAL CRISES
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL DEVELOPMENT
dc.subjectFINANCIAL FRAGILITY
dc.subjectFINANCIAL INNOVATION
dc.subjectFINANCIAL INSTABILITY
dc.subjectFINANCIAL INSTITUTION
dc.subjectFINANCIAL INSTITUTIONS
dc.subjectFINANCIAL INTERMEDIARIES
dc.subjectFINANCIAL MARKET
dc.subjectFINANCIAL MARKET PARTICIPANTS
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL REGULATION
dc.subjectFINANCIAL SAFETY NET
dc.subjectFINANCIAL SECTOR
dc.subjectFINANCIAL STABILITY
dc.subjectFINANCIAL STRUCTURE
dc.subjectFINANCIAL STUDIES
dc.subjectFINANCIAL SYSTEM
dc.subjectFINANCIAL SYSTEMS
dc.subjectFINANCIAL VOLATILITY
dc.subjectGENERAL EQUILIBRIUM
dc.subjectGENERAL EQUILIBRIUM ANALYSIS
dc.subjectHOLDING
dc.subjectINDIVIDUAL MARKET
dc.subjectINFORMATION ASYMMETRIES
dc.subjectINFORMATION ASYMMETRY
dc.subjectINFORMATION PROCESSING
dc.subjectINFORMATION TECHNOLOGY
dc.subjectINNOVATION
dc.subjectINTEREST RATES
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL FINANCE
dc.subjectINVESTMENT CHOICES
dc.subjectINVESTMENT DECISIONS
dc.subjectIRRATIONAL EXUBERANCE
dc.subjectLENDER
dc.subjectLENDER OF LAST RESORT
dc.subjectLIQUID ASSETS
dc.subjectLIQUIDITY
dc.subjectLIQUIDITY PROBLEMS
dc.subjectLIQUIDITY RISK
dc.subjectLOAN
dc.subjectMACROECONOMIC CONTEXT
dc.subjectMACROECONOMIC POLICY
dc.subjectMACROECONOMICS
dc.subjectMARK-TO-MARKET
dc.subjectMARK-TO-MARKET ACCOUNTING
dc.subjectMARKET DISCIPLINE
dc.subjectMARKET FAILURE
dc.subjectMARKET FAILURES
dc.subjectMARKET LIQUIDITY
dc.subjectMARKET PARTICIPANT
dc.subjectMARKET PARTICIPANTS
dc.subjectMARKET PLAYERS
dc.subjectMARKET PRICES
dc.subjectMARKET PRICING
dc.subjectMARKET REQUIREMENTS
dc.subjectMATURITY
dc.subjectMATURITY MISMATCH
dc.subjectMONETARY POLICY
dc.subjectMORAL HAZARD
dc.subjectNEGATIVE EXTERNALITIES
dc.subjectPAYMENT SYSTEM
dc.subjectPAYMENT SYSTEMS
dc.subjectPECUNIARY EXTERNALITIES
dc.subjectPOLICY RESPONSE
dc.subjectPOLICY RESPONSES
dc.subjectPOLITICAL ECONOMY
dc.subjectPORTFOLIO
dc.subjectPRIVATE CAPITAL
dc.subjectPRUDENTIAL REGULATION
dc.subjectPRUDENTIAL REQUIREMENTS
dc.subjectPUBLIC DEBT
dc.subjectPUBLIC GOOD
dc.subjectPUBLIC INVESTMENT
dc.subjectPUT OPTION
dc.subjectRATING AGENCIES
dc.subjectREGULATOR
dc.subjectREGULATORS
dc.subjectREGULATORY FRAMEWORK
dc.subjectREGULATORY REQUIREMENTS
dc.subjectRESERVE
dc.subjectRESERVE REQUIREMENTS
dc.subjectRETURN
dc.subjectRETURNS
dc.subjectRISK MANAGEMENT
dc.subjectRISK TAKING
dc.subjectSAFETY
dc.subjectSAFETY NET
dc.subjectSHAREHOLDERS
dc.subjectSIDE EFFECTS
dc.subjectSOCIAL BENEFITS
dc.subjectSOCIAL COSTS
dc.subjectSOLVENCY
dc.subjectSYSTEMIC RISK
dc.subjectSYSTEMIC RISKS
dc.subjectTAX
dc.subjectTAXATION
dc.subjectTRADING
dc.subjectUTILITY MAXIMIZATION
dc.subjectUTILITY THEORY
dc.subjectVOLATILITY
dc.subjectWEALTH
dc.subjectWHOLESALE FUNDING
dc.titleThe Conceptual Foundations of Macroprudential Policy : A Roadmapen
dspace.entity.typePublication
okr.crosscuttingsolutionareaJobs
okr.crossref.titleThe Rhyme and Reason for Macroprudential Policy: Four Guideposts to Find Your Bearings
okr.date.disclosure2013-08-01
okr.date.doiregistration2025-04-10T11:55:32.526661Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2013/08/18112903/rhyme-reason-macroprudential-policy-four-guideposts-find-your-bearings-rhyme-reason-macroprudential-policy-four-guideposts-find-your-bearings
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeSocial Protection and Labor
okr.globalpracticeFinance and Markets
okr.globalpracticeTrade and Competitiveness
okr.guid875291468128697576
okr.identifier.doi10.1596/1813-9450-6576
okr.identifier.externaldocumentum090224b0843a31b1_2_0
okr.identifier.internaldocumentum18112903
okr.identifier.reportWPS6576
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/08/15/000158349_20130815162100/Rendered/PDF/WPS6576.pdfen
okr.topicBanks and Banking Reform
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicEconomic Theory and Research
okr.topicSocial Protections and Labor::Labor Policies
okr.topicPrivate Sector Development::Emerging Markets
okr.topicMacroeconomics and Economic Growth
okr.unitOffice of the Chief Economist, Latin America and the Caribbean Region
relation.isAuthorOfPublication35317b87-0569-5cde-bb5e-db1a425e6889
relation.isAuthorOfPublicationddbea2d3-9cc2-52f4-ab28-94372063d761
relation.isAuthorOfPublication.latestForDiscovery35317b87-0569-5cde-bb5e-db1a425e6889
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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