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Evaluating the Net Benefits of Macroprudential Policy: A Cookbook

Author

Listed:
  • Mr. Nicolas Arregui
  • Mr. Jaromir Benes
  • Mr. Ivo Krznar
  • Ms. Srobona Mitra
  • Mr. Andre O Santos

Abstract

The paper proposes a simple, new, analytical framework for assessing the cost and benefits of macroprudential policies. It proposes a measure of net benefits in terms of parameters that can be estimated: the probability of crisis, the loss in output given crisis, policy effectiveness in bringing down both the probability and damage during crisis, and the output-cost of a policy decision. It discusses three types of policy leakages and identifies instruments that could best minimize the leakages. Some rules of thumb for policymakers are provided.

Suggested Citation

  • Mr. Nicolas Arregui & Mr. Jaromir Benes & Mr. Ivo Krznar & Ms. Srobona Mitra & Mr. Andre O Santos, 2013. "Evaluating the Net Benefits of Macroprudential Policy: A Cookbook," IMF Working Papers 2013/167, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2013/167
    as

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    References listed on IDEAS

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