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We analyse the effects of macroprudential and monetary policies and their interactions using an estimated dynamic stochastic general equilibrium (DSGE) model tailored to Sweden. Households face a ceiling on their loan-to-value ratio and must amortize their mortgages. The government grants mortgage interest payment deductions. Lending rates are affected by mortgage risk weights. We find that demand-side macroprudential measures are more effective in curbing household debt ratios than monetary policy, and they are less costly in terms of foregone consumption. A tighter macroprudential stance is also found to be welfare improving, by promoting lower consumption volatility in response to shocks, especially when using a combination of macroprudential instruments.

Monetary policy --- Financial risk management --- Housing --- Affordable housing --- Homes --- Houses --- Housing needs --- Residences --- Slum clearance --- Urban housing --- City planning --- Dwellings --- Human settlements --- Risk management --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Econometric models. --- Social aspects --- Exports and Imports --- Infrastructure --- Macroeconomics --- Real Estate --- Industries: Financial Services --- Financial Markets and the Macroeconomy --- Monetary Policy --- Central Banks and Their Policies --- Financial Institutions and Services: Government Policy and Regulation --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- International Lending and Debt Problems --- Macroeconomics: Consumption --- Saving --- Wealth --- Housing Supply and Markets --- Economic Development: Urban, Rural, Regional, and Transportation Analysis --- Finance --- International economics --- Property & real estate --- Amortization --- Consumption --- Housing prices --- Financial institutions --- External debt --- National accounts --- Prices --- Debt service --- Economics --- Saving and investment --- Sweden

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Zonder onderwerpscode: financiewezen

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Zonder onderwerpscode: financiewezen

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This simulation-based paper investigates the impact of different methods of dynamic provisioning on bank soundness and shows that this increasingly popular macroprudential tool can smooth provisioning costs over the credit cycle and lower banks’ probability of default. In addition, the paper offers an in-depth guide to implementation that addresses pertinent issues related to data requirements, calibration and safeguards as well as accounting, disclosure and tax treatment. It also discusses the interaction of dynamic provisioning with other macroprudential instruments such as countercyclical capital.

Loan loss reserves --- Banking law --- Business cycles --- Banks and banking --- Law, Banking --- Financial institutions --- Bad debt reserves --- Loan loss allowances --- Provisioning (Banking) --- Bank reserves --- Econometric models. --- Law and legislation --- Banks and Banking --- Macroeconomics --- Money and Monetary Policy --- Industries: Financial Services --- Finance: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Business Fluctuations --- Cycles --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- General Financial Markets: Government Policy and Regulation --- Finance --- Banking --- Financial services law & regulation --- Monetary economics --- Loans --- Credit cycles --- Countercyclical capital buffers --- Credit --- Financial sector policy and analysis --- Financial regulation and supervision --- Money --- Basel II --- Asset requirements --- State supervision --- Spain

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Zonder onderwerpscode: financiewezen