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Macroprudential policy and household wealth inequality: Evidence from China

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  • Zhai, Kun
  • Zhao, Guoqing
  • Li, Ding

Abstract

The influence of LTV ceiling on household wealth inequality is not constant. This paper finds that when the return on housing investment is higher than the return on liquid assets, the LTV ceiling generally has a negative impact on household wealth inequality; otherwise, it is more likely to be positive. Increasing the LTV ceiling can significantly alleviate household wealth inequality in China. Housing price and the number of houses purchased are important channels, and the house purchase preference (savings rate and house purchase intention) plays a key role in regulating wealth distribution through the LTV ceiling.

Suggested Citation

  • Zhai, Kun & Zhao, Guoqing & Li, Ding, 2023. "Macroprudential policy and household wealth inequality: Evidence from China," Journal of Asian Economics, Elsevier, vol. 86(C).
    • Handle: RePEc:eee:asieco:v:86:y:2023:i:c:s1049007823000283
    DOI: 10.1016/j.asieco.2023.101608
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    Cited by:

    1. Yu You & Xiaoying Hu & Zongye Huang, 2024. "Macroprudential policies, capital controls, and income inequality," Review of International Economics, Wiley Blackwell, vol. 32(4), pages 1824-1867, September.

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    More about this item

    Keywords

    LTV ceiling; Household wealth inequality; OLG; Gini-RIF regression;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy

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