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Macroprudential policies and Brexit: A welfare analysis

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  • Margarita Rubio

Abstract

Brexit will have implications on financial stability and the implementation of macroprudential policies. The United Kingdom (UK) will no longer be subject to the jurisdiction of the European Systemic Risk Board. This paper studies the welfare implications of this change of regime. By means of a dynamic stochastic general equilibrium model, I compare the pre‐Brexit scenario with the new one, in which the UK sets macroprudential policy independently. I find that, after Brexit, the UK is better off by setting its own macroprudential policy without taking into account Europe's welfare as a whole.

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  • Margarita Rubio, 2024. "Macroprudential policies and Brexit: A welfare analysis," Economic Inquiry, Western Economic Association International, vol. 62(3), pages 1246-1267, July.
    • Handle: RePEc:bla:ecinqu:v:62:y:2024:i:3:p:1246-1267
    DOI: 10.1111/ecin.13214
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    1. Li, Kexin & Chen, Zhongfei & Andrikopoulos, Athanasios, 2024. "Capital inflow liberalization and bank credit risk," Journal of International Money and Finance, Elsevier, vol. 142(C).

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