Evaluating the Net Benefits of Macroprudential Policy : A Cookbook

Author/Editor: Nicolas Arregui ; Jaromir Benes ; Ivo Krznar ; Srobona Mitra ; Andre Santos
Publication Date: July 17, 2013
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: 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.
Series: Working Paper No. 13/167
Subject(s): Macroprudential Policy | Financial sector | Financial risk | Financial crisis | Risk management

Publication Date: July 17, 2013
ISBN/ISSN: 9781484335727/1018-5941 Format: Paper
Stock No: WPIEA2013167 Pages: 73
US$18.00 (Academic Rate:
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