The IMF has just published chapters 2 and 3 of the September 2011 Global Financial Stability Report.
Chapter 2, titled “Long-term Investors and Their Asset Allocation: Where Are They Now,” examines the fundamental drivers of the longer-term asset allocation decisions of unleveraged private and public institutional investors.
The analysis shows that private asset allocation is driven most strongly by positive growth prospects and falling risks in the recipient countries; interest rate differentials between countries play a lesser role.
Chapter 3, “Towards Operational Zing Macroprudential Policies: When to Act,” argues that microprudential policy seeks to reduce the risk of server disruption to system-wide financial services, or “systemic risk,” which could have serious adverse effects on the real economy.
The study finds that a similar set of macroprudential tools can be effective across different types of economies, which should help to facilitate policy coordination at the international level.
Access Chapter 2 here.
Access Chapter 3 here.