A Welfare Analysis of Macroprudential Policy Rules in the Euro Area

Jean-Christophe Poutineau and Gauthier Vermandel

Revue d'économie politique, 2017, vol. 127, issue 2, 191-226

Abstract: In an estimated DSGE model of the European Monetary Union that accounts for financial differences between core and peripheral countries, we find that country-adjusted macroprudential measures lead to significant welfare gains with respect to a uniform macroprudential policy rule that reacts to union-wide financial developments. However, peripheral countries are the winners from the implementation of macroprudential measures while core countries incur welfare losses, thus questioning the interest of adopting coordinated macroprudential measures with peripheral countries.

Keywords: macroprudential policy; euro area; financial accelerator; DSGE Two-country model; bayesian estimation (search for similar items in EconPapers)
Date: 2017
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Working Paper: A Welfare Analysis of Macroprudential Policy Rules in the Euro Area (2017)
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