BoE paper explores redistribution from macro-pru tools
Evidence suggests there are stability benefits but also costs from using borrower-based tools
Research published by the Bank of England explores the costs and benefits of imposing macro-prudential limits on borrowers.
The working paper, published on October 31, reviews several studies of countries that have imposed borrower-based macro-prudential tools, such as maximum loan-to-value ratios and debt service-to-income ratios.
The researchers – from the BoE as well as London’s Bayes Business School and Rome’s Luiss University – find borrower-based measures are generally effective at “breaking
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