TY - BOOK ID - 84658737 TI - Macroprudential Policy and Labor Market Dynamics in Emerging Economies AU - Finkelstein Shapiro, Alan. AU - Gonzalez, Andres. PY - 2015 SN - 147551803X 1484320662 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Business cycles. KW - Financial crises. KW - Fiscal policy -- Developing countries. KW - Monetary policy. KW - Management KW - Business & Economics KW - Management Styles & Communication KW - Labor KW - Macroeconomics KW - Employment KW - Unemployment KW - Wages KW - Intergenerational Income Distribution KW - Aggregate Human Capital KW - Aggregate Labor Productivity KW - Business Fluctuations KW - Cycles KW - General Financial Markets: Government Policy and Regulation KW - Formal and Informal Sectors KW - Shadow Economy KW - Institutional Arrangements KW - Labor Demand KW - Demand and Supply of Labor: General KW - Unemployment: Models, Duration, Incidence, and Job Search KW - Financial Markets and the Macroeconomy KW - Labour KW - income economics KW - Self-employment KW - Labor markets KW - Macroprudential policy KW - Financial sector policy and analysis KW - Self-employed KW - Labor market KW - Economic theory KW - Economic policy KW - Mexico KW - Income economics UR - https://www.unicat.be/uniCat?func=search&query=sysid:84658737 AB - Emerging economies have high shares of self-employed individuals running owner-only firms who, in contrast to many salaried firms, have little access to formal financing and therefore rely on informal financing (input credit) from other firms. We build a small open economy real business cycle model with labor and financial market frictions where formal credit markets, informal credit, and the structure of the labor market interact. The model successfully replicates the cyclical behavior of sectoral employment, formal credit, and the main macroeconomic aggregates in emerging economies. We show that a countercyclical macroprudential policy that reduces formal credit fluctuations has positive though quantitatively limited effects on consumption and output volatility, but generates larger unemployment fluctuations in response to productivity shocks; the same policy increases labor market and aggregate volatility in response to net worth shocks. The link between input credit and the labor market structure---key for capturing the cyclical dynamics of labor and credit markets in the data---plays a crucial role for these results. ER -