Macroprudential Policies and Inequalities in Europe: The Role of Household Portfolio Composition

Marie-Hélène Gagnon, Céline Gimet and Uros Herman
Additional contact information
Marie-Hélène Gagnon: Université Laval [Québec]
Céline Gimet: Aix Marseille Univ, CNRS, AMSE, Marseille, France
Uros Herman: Aix Marseille Univ, CNRS, AMSE, Marseille, France

No 2617, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: We study the effects of macroprudential policies on income and wealth inequality across 18 Eurozone countries over the period 2000–2024. We focus on the financially constrained Wealthy Hand-to-Mouth households for whom the regulation changes are likely to be consequential. We present insights from a stylised two-economy incomplete-markets model where the heterogeneity in household portfolio composition shapes the effects on inequalities of borrower-based regulation. Using panel regressions and local projections, we test empirically the model's predictions that macroprudential policies matter for inequalities and their effects differ depending on the concentration of housing or pension assets in the Wealthy Hand-to-Mouth households' illiquid portfolios. The empirical findings underscore that in housing dominant economies, the reduction of the LTV ratio improves wealth inequalities in the short term through a collateral-leverage mechanism, whereas it persistently widens wealth disparities in pension-dominant economies through credit exclusion effects.

Keywords: Loan-to-value regulation; Macroprudential policy; Eurozone; Local projections; Wealthy hand-to-mouth; Heterogeneity; Portfolio; Wealth inequalities (search for similar items in EconPapers)
JEL-codes: D31 E21 E44 G28 R21 (search for similar items in EconPapers)
Date: 2026-06-01
New Economics Papers: this item is included in nep-ifn
Note: Working paper AMSE 2026-17
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-05666769/document (application/pdf)
no

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:2617

Access Statistics for this paper

More papers in AMSE Working Papers from Aix-Marseille School of Economics, France AMU-AMSE - 5-9 Boulevard Maurice Bourdet, CS 50498 - 13205 Marseille Cedex 1. Contact information at EDIRC.
Bibliographic data for series maintained by Gregory Cornu ().