2026-04-17T05:16:16Zhttps://recercat.cat/oai/request

oai:recercat.cat:10230/470902025-12-18T01:26:54Zcom_2072_6col_2072_452952

00925njm 22002777a 4500 dc Freixas, Xavier author Perez Reyna, David author 2021-04-12T07:54:28Z 2021-04-12T07:54:28Z 2021 We provide a microfounded framework for the welfare analysis of macroprudential policy within a model of rational bubbles. For this, we posit an overlapping generation model where productivity and credit supply are subject to random shocks. We find that when real interest rates are lower than the rate of growth, credit financed bubbles may be welfare improving because of their role as a buffer in channeling excessive credit supply and inefficient investment at the firms’ level, but their sudden price decrease may cause a systemic crisis. Therefore, a well designed macroprudential policy plays a key role in improving efficiency while preserving financial stability. Our theoretical framework allows us to compare the efficiency of alternative macroprudential policies. Contrarily to conventional wisdom, we show that macroprudential policy (i) may be efficient even in the absence of systemic risk, (ii) has to be contingent on productivity shocks and (iii) must be contingent upon the level of real interest rates. Xavier Freixas has benefited from the support of Ministerio de Economia y Competividad ECO2014-55488-P, Generalitat de Catalunya and Barcelona GSE. Bank Bubble Macroprudential regulation E44 E60 G18 G21 G28 Optimal macroprudential policy and rational bubbles