Evaluating the Net Benefits of Macroprudential Policy: A Cookbook

International Monetary Fund

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Date Published 2013
Primary Author Nicolas Arregui
Other Authors Jaromír Beneš, Ivo Krznar, Srobona Mitra, Andre O. Santos
Theme Real Estate Cycles and Bubbles


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.

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