Volatile Capital Flows and Economic Growth: The Role of Macro-prudential Regulation (Summary column)

Macro-prudential policies, their use, implementation and
effectiveness, have been at the centre of a heated debate
since the onset of the global financial crisis. The work that has
been produced solely focused on the implications of macroprudential
regulation for short-term economic stability.
This column sets the emphasis on the long-term effects
of financial regulation and finds that macro-prudential
regulation promotes economic growth by mitigating the
adverse effects of financial volatility. The results support the
argument that macro-prudential policy rules designed to
ensure financial stability are beneficial to long-run economic
growth.