EVALUATION OF MACROECONOMIC
MODELS FOR FINANCIAL STABILITY
Dimitrios P. Tsomocos
As financial stability has gained focus in economic policymaking,
the demand for analyses of
financial stability and the consequences of economic policy has increased.
macroeconomic models are available for policy analyses, and this paper
usefulness of some models from the perspective of financial stability.
analyses are complicated by the lack of a clear and consensus definition
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.