Macroprudential Policy:The Case of Brazil

In the wake of 2008 financial crisis there has been growing interest in issues related to macroprudential policy and the coordinated attempt to ensure financial stability as a whole. The main objective of the paper is to provide a combination of both theoretical and empirical analysis of the effectiveness of macroprudential policy, implemented in Brazilian economy in 2010. Based on an existing methodology and using data from 46 countries, the paper develops methods for assessing the sensitivity of capital flows to global financial conditions. The main empirical findings cannot be interpreted in terms of effectiveness of the measures, since the interaction terms aiming to capture potential shift in Brazilian capital inflows turn out to be statistically insignificant both prior and after the introduction of the measures.