Eurozone macro-prudential policies have large cross-border effects – ECB paper
Impact especially strong when different countries have asymmetric financial cycles, researchers say
Macro-prudential policies in the eurozone have significant cross-border spillovers, a working paper published by the European Central Bank finds.
In Macro-prudential policy in a monetary union with cross-border banking, Matthieu Darracq Pariès, Christoffer Kok and Elena Rancoita present a two-country dynamic stochastic general equilibrium model. The authors calibrate their model for the four largest euro area countries – France, Germany, Italy and Spain.
They pay particular attention to
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