In response to the global financial crisis a new policy paradigm emerged in which capital controls and other quantitative restrictions on credit flows have become part of the standard crisis prevention policy toolkit. A new strand of theoretical literature studies the use of capital controls in...

There is considerable evidence that boom and bust cycles in real estate are the primary cause of financial crises. This paper develops a model of real estate pricing based on rational behaviour with two regimes. In 'normal times' prices of housing units are determined by the consumers who live...

The financial crisis has made the need for a more integrated regulatory and supervisory framework for the financial services sector evident. An important step towards this aim is the establishment of the Single Supervisory Mechanism. European leaders have committed to moving toward a banking...

The paper analyses the swift growth of bank loans granted to the nongovernmental sector with a special attention on the case of Romania, concluding that it creates several perils for the macroeconomic and financial stability.

In this paper we study whether policy makers should wait to intervene until a financial crisis strikes or rather act in a preemptive manner. We study this question in a relatively simple dynamic stochastic general equilibrium model in which crises are endogenous events induced by the presence of...

This paper analyzes quantitatively the extent to which there is overborrowing (i.e., inefficient borrowing) in a business cycle model for emerging market economies with production and an occasionally binding credit constraint. The main finding of the analysis is that overborrowing is not a...