Evaluation of Macroeconomic Models for Financial Stability Analysis

Bårdsen, Gunnar, Lindquist, Kjersti-Gro and Tsomocos, Dimitrios (2006) Evaluation of Macroeconomic Models for Financial Stability Analysis. Norges Bank.

Abstract

As financial stability has gained focus in economic policymaking, the demand for analyses of financial stability and the consequences of economic policy has increased. Alternative macroeconomic models are available for policy analyses, and this paper evaluates the usefulness of some models from the perspective of financial stability. Financial stability analyses are complicated by the lack of a clear and consensus definition of ‘financial stability’, and the paper concludes that operational definitions of this term must be expected to vary across alternative models. Furthermore, since assessment of financial stability in general is based on a wide range of risk factors, one can not expect one single model to satisfactorily capture all the risk factors. Rather, a suite of models is needed. This is in particular true for the evaluation of risk factors originating and developing inside and outside the financial
system respectively.

Item Type: Other Working Paper
Keywords: Financial stability; Banks; Default; Macroeconomic models; Policy; finance
Subject(s): Finance
Date Deposited: 21 Mar 2013 15:43
Last Modified: 23 Feb 2017 09:59
Funders: N/A
URI: http://eureka.sbs.ox.ac.uk/id/eprint/4536

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