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Evaluating the Net Benefits of Macroprudential Policy: A Cookbook Nicolas Arregui

Evaluating the Net Benefits of Macroprudential Policy: A Cookbook

Nicolas Arregui

Published July 17th 2013
ISBN : 9781484319260
ebook
73 pages
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 About the Book 

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 outputMoreThe 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.