Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/174436 
Year of Publication: 
2016
Series/Report no.: 
Working Papers No. 2016-06
Publisher: 
Banco de México, Ciudad de México
Abstract: 
We develop a two-country DSGE model with global banks to analyze the role of crossborder banking flows on the transmission of a quality of capital shock in the United States to emerging market economies (EMEs). Banks face a moral hazard problem for borrowing from households. EME's banks might be risky: they can also be constrained to borrow from U.S. banks. A negative quality of capital shock in the United States generates a global financial crisis. EME's macroprudential policy that targets non-core liabilities makes the domestic economy resilient to the volatility of cross-border banking flows and makes EME's households better-off.
Subjects: 
Global banking
emerging market economies
financial frictions
macroprudential policy
JEL: 
G28
E44
F42
G21
Document Type: 
Working Paper
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