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Does macroprudential policy affect wealth inequality? Evidence from synthetic controls

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  • Teixeira, André

Abstract

This paper examines the effects of macroprudential policy (MaPP) on wealth inequality using a large dataset of 171 countries. I find that, after the adoption of MaPP, wealth concentration in the treated countries increases by 3.4 percentage points in a decade. This finding is explained by a rise in the wealth share of the top 1% combined with a sharp decline in the wealth share of the bottom 50%. These effects are stronger for prudential rules based on income, particularly in advanced economies.

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  • Teixeira, André, 2023. "Does macroprudential policy affect wealth inequality? Evidence from synthetic controls," Journal of Financial Stability, Elsevier, vol. 67(C).
    • Handle: RePEc:eee:finsta:v:67:y:2023:i:c:s1572308923000359
    DOI: 10.1016/j.jfs.2023.101135
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    Cited by:

    1. Madeira, Carlos, 2024. "The impact of macroprudential policies on industrial growth," Journal of International Money and Finance, Elsevier, vol. 145(C).
    2. António Afonso & André Teixeira, 2023. "Bank Regulation and Sovereign Risk: A Paradox," Working Papers REM 2023/0272, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.

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    More about this item

    Keywords

    Bank regulation; Macroprudential policy; Inequality; Wealth; Synthetic controls;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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