Research compares borrower-based macro-pru tools
Some tools generate ‘less pronounced macro feedback’ than others
Debt service-to-income (DSTI) caps result in "less pronounced macro feedback effects" in the short term than loan-to-value (LTV) limits, a working paper published by the European Central Bank finds.
In Assessing the efficacy of borrower-based macroprudential policy using an integrated micro-macro model for European households, Marco Gross and Francisco Javier Población García analyse which tools are most effective.
Using estimates for seven EU countries, the authors find DSTI caps appear "more
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