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ORCID

Jérôme Vandenbussche 0000-0002-1361-7849

Keywords

Macroprudential Policies; Financial Stability; Credit Growth; Southeastern Europe

Abstract

This paper presents a detailed account of the rich set of macroprudential measures (MPPs) implemented in Bulgaria, Croatia, Romania, and Serbia during their synchronized boom and bust cycles in 2002–12, and assesses their effectiveness in managing credit growth. Only strong MPPs helped contain domestic credit growth during the boom years, but circumvention via direct external borrowing offset their effectiveness to a large extent. MPPs taken during the bust had no discernible impact. The paper concludes that (i) proper calibration of MPPs is of the essence; (ii) only strong, broad-based MPPs can contain credit booms; (iii) econometric studies of macroprudential policy effectiveness should focus on concrete policy measures rather than on instruments use; and (iv) in so doing should allow for possible non-linear and state-contingent effects.

Acknowledgments

We would like to thank two anonymous referees as well as participants at the 2016 IFABS conference and at a seminar at the IMF.

First Page

60

Last Page

102

Page Count

43

Received Date

8 February 2018

Revised Date

6 April 2018

Accept Date

16 April 2018

Online Available Date

11 May 2018

DOI

10.7172/2353-6845.jbfe.2018.1.4

JEL Code

G18; G28

Publisher

University of Warsaw

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