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The objective of the Systemic Risk and Prudential Policy course is to present state of the frontier research on systemic risk and to illustrate its implications for micro and macro prudential regulation as well as monetary and competition policy.
The course covers the main models of systemic risk proposed in the literature and the quantitative techniques for the measurement and prediction of systemic risk.

The course provides a critical summary of the prudential regulation initiatives for systemic risk, highlighting the limitations of current prudential policy, the potential of the new macroprudential approach, and the costs and benefits of the proposed policy measures.

Additionally, the course examines the rise of shadow banks, the role of banks as providers of liquidity insurance, and the interaction between securitization and systemic risk.

Fabio Ghironi, 07 December 2017

Most macroeconomists have accepted that their tools need to incorporate more real world phenomena, such as financial intermediation and labor market frictions. Fabio Ghironi discusses the need to incorporate more microeconomics to macroeconomics.

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The U.S. Great Recession has pointed to the importance of the banking sector in originating, amplifying, and propagating financial shocks to the real side of the economy. In response to the downturn, there has been a great deal of new regulation to mitigate the effects of future financial crises. Quantitative structural models of the banking sector that avoid the Lucas critique are critical to conduct counterfactual policy to evaluate the effects of new regulation. One important factor in the effects of policy is banking industry market structure and competition among banks of different sizes. Regulation itself may effect market structure and the distribution of bank size. Understanding regulatory arbitrage and how competitiveness of the banking sector varies with changes in regulation is critical to understand the health of the financial system.

Christian Schubert, 22 January 2016

Nudges are modifications of people’s choice architecture that impact their behaviour but don’t change their incentives or coerce them. As a policy instrument, nudges have been shown to be effective in changing certain kinds of behaviours. This column explores the ethical issues that arise in employing such potentially manipulative policies. An evaluation programme is outlined that explores a potential policy’s impact on people’s wellbeing, autonomy, and integrity, along with its practical implications.

Sascha O. Becker, Hans Hvide, 21 April 2013

Standard microeconomics ignores personalities, but business studies stress the importance of entrepreneurs. This column presents evidence that shows that personalities are important. Looking into the death of a firm’s founder during the first ten years of a company’s existence, the data suggest that entrepreneurs matter – they are the ‘glue’ that holds a business together.

Events

CEPR Policy Research