National macroprudential policies in the Euro Area: flexibility vs. supervision
In this paper, I shed some light on a much discussed topic in the policy debate: Should national macroprudential policies be supervised by a supranational entity in a monetary union? To do so, I develop a two-country DSGE monetary union model, which I calibrate to the core and periphery regions of t...
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| Format: | Article |
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Elsevier
2018
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| Online Access: | https://eprints.nottingham.ac.uk/52049/ |
| _version_ | 1848798635933827072 |
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| author | Rubio, Margarita |
| author_facet | Rubio, Margarita |
| author_sort | Rubio, Margarita |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | In this paper, I shed some light on a much discussed topic in the policy debate: Should national macroprudential policies be supervised by a supranational entity in a monetary union? To do so, I develop a two-country DSGE monetary union model, which I calibrate to the core and periphery regions of the euro area. Monetary policy is set by the ECB, while macroprudential policies, based on the loan-to-value ratio (LTV), are set nationally. Results show that, given that the economy in the periphery is more leveraged, macroprudential policies need to be more aggressive in that region. I also find that, when LTV policies are set independently in a non-coordinated manner by each authority, albeit being beneficial for both countries and for the union as a whole, welfare gains are not as high as when they are coordinated and supervised by a separate body. |
| first_indexed | 2025-11-14T20:22:55Z |
| format | Article |
| id | nottingham-52049 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T20:22:55Z |
| publishDate | 2018 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-520492020-05-04T19:49:33Z https://eprints.nottingham.ac.uk/52049/ National macroprudential policies in the Euro Area: flexibility vs. supervision Rubio, Margarita In this paper, I shed some light on a much discussed topic in the policy debate: Should national macroprudential policies be supervised by a supranational entity in a monetary union? To do so, I develop a two-country DSGE monetary union model, which I calibrate to the core and periphery regions of the euro area. Monetary policy is set by the ECB, while macroprudential policies, based on the loan-to-value ratio (LTV), are set nationally. Results show that, given that the economy in the periphery is more leveraged, macroprudential policies need to be more aggressive in that region. I also find that, when LTV policies are set independently in a non-coordinated manner by each authority, albeit being beneficial for both countries and for the union as a whole, welfare gains are not as high as when they are coordinated and supervised by a separate body. Elsevier 2018-09-30 Article PeerReviewed Rubio, Margarita (2018) National macroprudential policies in the Euro Area: flexibility vs. supervision. Economics Letters, 170 . pp. 55-58. ISSN 0165-1765 Macroprudential policies LTV monetary union coordination financial stability https://www.sciencedirect.com/science/article/pii/S0165176518302155 doi:10.1016/j.econlet.2018.05.036 doi:10.1016/j.econlet.2018.05.036 |
| spellingShingle | Macroprudential policies LTV monetary union coordination financial stability Rubio, Margarita National macroprudential policies in the Euro Area: flexibility vs. supervision |
| title | National macroprudential policies in the Euro Area: flexibility vs. supervision |
| title_full | National macroprudential policies in the Euro Area: flexibility vs. supervision |
| title_fullStr | National macroprudential policies in the Euro Area: flexibility vs. supervision |
| title_full_unstemmed | National macroprudential policies in the Euro Area: flexibility vs. supervision |
| title_short | National macroprudential policies in the Euro Area: flexibility vs. supervision |
| title_sort | national macroprudential policies in the euro area: flexibility vs. supervision |
| topic | Macroprudential policies LTV monetary union coordination financial stability |
| url | https://eprints.nottingham.ac.uk/52049/ https://eprints.nottingham.ac.uk/52049/ https://eprints.nottingham.ac.uk/52049/ |