BoJ paper details approach to macro stress testing
Model assesses how shocks spread through the economy
A research paper published today by the Bank of Japan (BoJ) details the way in which the central bank performs macro stress tests.
In the paper, Macro Stress Testing at the Bank of Japan, a group of economists from the central bank explain the model behind macro stress tests, which are used to assess the transmission of shocks throughout the economy.
The testing framework includes two "significant features", the authors say: a model of the feedback loop that exists between the real economy and
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