Optimal policy mix in Brazil boosts economy and stabilizes financial cycles.
The study looked at how different policies in Brazil can help during economic ups and downs. By using a special model, the researchers found that having rules for how money is managed can make a big difference. They discovered that when the financial situation is unstable, it's important for certain policies to change with the cycle. For example, it's best for the government to spend more money when the economy is doing poorly, but not when the financial sector is in trouble. This way, the country can better handle changes in the economy and keep things stable.