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On the empirics of reserve requirements and economic growth

Jesus Crespo-Cuaresma, Gregor von Schweinitz and Katharina Wendt
Authors registered in the RePEc Author Service: Jesus Crespo Cuaresma

No 8/2018, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

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 credit and GDP growth making use of Bayesian model averaging methods. In terms of credit growth, we can show that initial negative effects of higher reserve requirements (which are often reported in the literature) tend to be short-lived and turn positive in the longer run. In terms of GDP per capita growth, we find on average a negative but not robust effect of regulation in tranquil times, which is only partly offset by a positive but also not robust effect in crisis times.

Keywords: reserve requirements; macroprudential policy; credit growth; economic growth; Bayesian model averaging (search for similar items in EconPapers)
JEL-codes: C11 E44 F43 G28 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fdg and nep-mac
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Journal Article: On the empirics of reserve requirements and economic growth (2019) Downloads
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