New policy mix to stabilize economy and prevent financial crises
The article discusses how the financial sector can impact the economy and stability. By using a DSGE model, the researchers studied how monetary and macroprudential policies can influence financial stability in Indonesia. They found that a combination of policies is needed to maintain both price stability and financial stability. The model included mechanisms like collateral constraints and financial accelerators to simulate the effects of these policies on borrowing and lending behavior. The study suggests that these policies can help regulate the financial system and reduce risks associated with excessive borrowing and lending.