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: ULaval - Université Laval [Québec]
Céline Gimet: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, IEP Aix-en-Provence - Sciences Po Aix - Institut d'études politiques d'Aix-en-Provence
Uros Herman: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

Working Papers from HAL

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)
Date: 2026-06
Note: View the original document on HAL open archive server: https://hal.science/hal-05666769v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-05666769v1/document (application/pdf)

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:hal:wpaper:hal-05666769

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().