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On the empirics of reserve requirements and economic growth

Jesus Crespo Cuaresma, Gregor von Schweinitz and Katharina Wendt

Journal of Macroeconomics, 2019, vol. 60, issue C, 253-274

Abstract: Reserve requirements, as a tool of macroprudential policy, have been increasingly employed since the outbreak of the great financial crisis. We conduct an analysis of the effect of reserve requirements in tranquil and crisis times on long-run growth rates of GDP per capita and credit (%GDP) making use of Bayesian model averaging methods. Regulation has on average a negative effect on GDP in tranquil times, which is only partly offset by a positive (but not robust effect) in crisis times. Credit over GDP is positively affected by higher requirements in the longer run.

Keywords: Reserve requirements; Macroprudential policy; Credit growth; Economic growth; Bayesian model averaging (search for similar items in EconPapers)
JEL-codes: E44 F43 G28 C11 (search for similar items in EconPapers)
Date: 2019
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