EconPapers    
Economics at your fingertips  
 

Modelling and simulating the banking sectors of the US, Germany and the UK

Iana Liadze (i.liadze@niesr.ac.uk) and Professor E. Philip Davis (e_philip_davis@msn.com)

No 396, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

Abstract: The need to understand the dynamics and after-effects of the recent financial crisis, the evolution of macroprudential surveillance and the introduction of macroprudential regulation all require appropriate macroeconomic models of financial institutions and markets. We present models of the banking systems of the UK, US and Germany integrated into the NiGEM global macroeconomic model. These estimated models permit an evaluation both of the effectiveness of macro-prudential policies and their interaction with monetary and fiscal policy. A key policy implication is to remind us that tightening of regulation is not a free good” but does impact on the economy via the cost of credit. Meanwhile, the impact of macroprudential policies is quite small on the overall economy, suggesting their use in overall macroeconomic stabilisation as a counterpart to monetary policy may be limited although the effect on lending growth and hence potentially in restraining credit booms is more marked. We contend that increasingly active macroprudential policies will make such models as those presented here essential to a correct ongoing calibration and evaluation of policy.

Keywords: Macroprudential policy; macroeconomic models; banking system; capital adequacy; bank lending spreads (search for similar items in EconPapers)
JEL-codes: E27 G18 G21 (search for similar items in EconPapers)
Date: 2012-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.niesr.ac.uk/wp-content/uploads/2021/10/dp396-2.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesrd:396

Access Statistics for this paper

More papers in National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research 2 Dean Trench Street Smith Square London SW1P 3HE. Contact information at EDIRC.
Bibliographic data for series maintained by Library & Information Manager (library@niesr.ac.uk).

 
Page updated 2025-03-19
Handle: RePEc:nsr:niesrd:396