Evaluating the Net Benefits of Macroprudential Policy : A Cookbook

Author/Editor:

Andre O Santos ; Ivo Krznar ; Jaromir Benes ; Nicolas Arregui ; Srobona Mitra

Publication Date:

July 17, 2013

Electronic Access:

Free Full text (PDF file size is 2944 KB).Use the free Adobe Acrobat Reader to view this PDF file

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:

English

Publication Date:

July 17, 2013

ISBN/ISSN:

9781484335727/1018-5941

Stock No:

WPIEA2013167

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

73

Please address any questions about this title to publications@imf.org