@article { , title = {Cross-country spillovers from macroprudential regulation: Reciprocity and leakage}, abstract = {In a globally interconnected banking system, there can be spillovers from domestic macroprudential policies to foreign banks and vice versa, for example, through the presence of foreign branches in the domestic economy. The lack of reciprocity of some macroprudential instruments may result in an increase in bank ‡ows to those banks with lower regulatory levels, a phenomenon known as "leakage." This may decrease the e¤ectiveness of macroprudential policies in the pursuit of …nancial stability. To explore this topic, I consider a two-country DSGE model with housing and credit constraints. Borrowers can choose whether to borrow from domestic or foreign banks. Macroprudential policies are conducted at a national level and are represented by a countercyclical rule on the loan-to-value ratio. Results show that when there are some sort of reciprocity agreements on macroprudential policies across countries, …nancial stability and welfare gains are larger than in a situation of non reciprocity. An optimal policy analysis shows that, in order to enhance the e¤ectiveness of macroprudential policies, reciprocity mechanisms are desirable although the foreign macroprudential rule does not need to be as aggressive as the domestic one.}, doi = {10.1016/j.jimonfin.2019.102134}, eissn = {1873-0639}, issn = {0261-5606}, journal = {Journal of International Money and Finance}, note = {This paper was presented at the 2017 ASSA meetings in The author wants to thank conference participants for the comments received. The paper also received very valuable feedback at an ECB seminar. The author would like to thank seminar participants for their interest and discussion. Special thanks to Konstantin Kuck and Jongho Park, who discussed the paper at the INFINITI and the WEAI conferences, respectively. Also, thanks to the anonymous referee who evaluated my paper for the IFABS conference. All these comments have been carefully incorporated in the text. Special thanks to Harriet Lee for helping editing the text. All errors are mine.}, publicationstatus = {Published}, publisher = {Elsevier}, url = {https://nottingham-repository.worktribe.com/output/3682980}, volume = {103}, keyword = {Macroprudential Policies, Spillovers, Banking Regulation, Foreign Branches, Leakage, Loan-to-value JEL Classi…cation: E44, F34, F41}, year = {2020}, author = {Rubio, Margarita} }