Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
958015 | Journal of Economics and Business | 2007 | 14 Pages |
Abstract
In this paper, we investigate the short-run and long-run macroeconomic effects of bank net worth and capital adequacy regulations. In general, capital adequacy regulations work as a stabilizer in the sense that they reduce the macroeconomic effects of negative productivity shocks. In addition, strengthening of the regulations increases the long-run capital stock, although it may lead the economy to a recession in the short run. However, the timing of the introduction of tight regulations is important. If the regulations become tighter when a negative productivity shock occurs, the economy falls into a long and severe slump. This is consistent with what the Japanese economy has experienced after the bubble economy.
Related Topics
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Authors
Atsushi Miyake, Tamotsu Nakamura,