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National macroprudential policies in the Euro Area: flexibility vs. supervision

Rubio, Margarita



In this paper, I shed some light on a much discussed topic in the policy debate: Should national macroprudential policies be supervised by a supranational entity in a monetary union? To do so, I develop a two-country DSGE monetary union model, which I calibrate to the core and periphery regions of the euro area. Monetary policy is set by the ECB, while macroprudential policies, based on the loan-to-value ratio (LTV), are set nationally. Results show that, given that the economy in the periphery is more leveraged, macroprudential policies need to be more aggressive in that region. I also find that, when LTV policies are set independently in a non-coordinated manner by each authority, albeit being beneficial for both countries and for the union as a whole, welfare gains are not as high as when they are coordinated and supervised by a separate body.


Rubio, M. (2018). National macroprudential policies in the Euro Area: flexibility vs. supervision. Economics Letters, 170,

Journal Article Type Article
Acceptance Date May 27, 2018
Online Publication Date Jun 4, 2018
Publication Date Sep 30, 2018
Deposit Date May 29, 2018
Publicly Available Date Dec 5, 2019
Journal Economics Letters
Print ISSN 0165-1765
Electronic ISSN 0165-1765
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 170
Keywords Macroprudential policies, LTV, monetary union, coordination, financial stability
Public URL
Publisher URL
Copyright Statement Copyright information regarding this work can be found at the following address:


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