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Macroprudential policy and income inequality

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  • Frost, Jon
  • van Stralen, René

Abstract

Based on newly available data, we examine the relationship between macroprudential policies (MaPs) and the Gini coefficient of both market income inequality, i.e. the Gini coefficient of income inequality before redistributive policies, and net income inequality, i.e. inequality after redistribution. We run panel regressions for 69 countries over the period 2000–2013. Our results show a positive association of the use of some MaPs with both market and net income inequality. In particular, we find that concentration limits, macroprudential reserve requirements and interbank exposure limits have a positive relationship with market income inequality, while loan-to-value (LTV) limits have a positive association with net inequality. The results for other measures are relatively sensitive to specification.

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  • Frost, Jon & van Stralen, René, 2018. "Macroprudential policy and income inequality," Journal of International Money and Finance, Elsevier, vol. 85(C), pages 278-290.
    • Handle: RePEc:eee:jimfin:v:85:y:2018:i:c:p:278-290
    DOI: 10.1016/j.jimonfin.2017.11.010
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    6. Can Sever & Emekcan Yucel, 2021. "Electoral Cycles in Inequality Abstract:," Working Papers 2021/01, Bogazici University, Department of Economics.
    7. Lindokuhle Talent Zungu & Lorraine Greyling & Nkanyiso Mbatha, 2022. "Nonlinear Dynamics of the Development-Inequality Nexus in Emerging Countries: The Case of a Prudential Policy Regime," Economies, MDPI, vol. 10(5), pages 1-18, May.
    8. Bank for International Settlements, 2021. "Changing patterns of capital flows," CGFS Papers, Bank for International Settlements, number 66, december.
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    11. Glauco De Vita & Yun Luo, 2021. "Financialization, household debt and income inequality: Empirical evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 1917-1937, April.
    12. Ayako Saiki & Jon Frost, 2018. "Japan's Unconventional Monetary Policy and Income Distribution: Revisited," Working Papers e126, Tokyo Center for Economic Research.
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    19. Panagiotis Konstantinou & Anastasios Rizos & Artemis Stratopoulou, 2022. "Macroprudential policies and income inequality in former transition economies," Economic Change and Restructuring, Springer, vol. 55(2), pages 1005-1062, May.
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    21. Mathonnat, Clément & Williams, Benjamin, 2020. "Does more finance mean more inequality in times of crisis?," Economic Systems, Elsevier, vol. 44(4).
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    23. Siham MATALLAH & Lahouari BENLAHCENE & Amal MATALLAH, 2022. "Government subsidies and income inequality in Algeria: An analytical and empirical study," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(633), W), pages 147-162, Winter.
    24. Sonan Memon & Irfan A. Qureshi, 2021. "Income inequality and macroeconomic instability," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 758-789, May.

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    More about this item

    Keywords

    Macroprudential policy; Financial regulation; Inequality; Income distribution;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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