Uros Herman

2026-17

Macroprudential Policies and Inequalities in Europe: The Role of Household Portfolio Composition

Marie‐hélène Gagnon, Céline Gimet, Uroš Herman

Abstract We study the effects of macroprudential policies on income and wealth inequality across 18 Eurozone countries over the period 2000–2024. We focus on the financially constrained Wealthy Hand-to-Mouth households for whom the regulation changes are likely to be consequential. We present insights from a stylised two-economy incomplete-markets model where the heterogeneity in household portfolio composition shapes the effects on inequalities of borrower-based regulation. Using panel regressions and local projections, we test empirically the model's predictions that macroprudential policies matter for inequalities and their effects differ depending on the concentration of housing or pension assets in the Wealthy Hand-to-Mouth households' illiquid portfolios. The empirical findings underscore that in housing dominant economies, the reduction of the LTV ratio improves wealth inequalities in the short term through a collateral-leverage mechanism, whereas it persistently widens wealth disparities in pension-dominant economies through credit exclusion effects.

Keywords Loan-to-value regulation, Macroprudential policy, Eurozone, Local projections, Wealthy hand-to-mouth, Heterogeneity, Portfolio, Wealth inequalities

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2023-34

Who Gets Jobs Matters: Monetary Policy and the Labour Market in HANK and SAM

Uroš Herman, Matija Lozej

Abstract This paper first provides empirical evidence that labour market outcomes for the less educated workers, who also tend to be poorer, are substantially more volatile than those for the well-educated, who tend to be richer. We estimate job finding rates and separation rates by educational attainment for several European countries and find that job finding rates are smaller and separation rates larger at lower educational attainment levels. At cyclical frequencies, fluctuations of the job finding rate explain up to 80% of unemployment fluctuations for the less educated. We then construct a stylised HANK model augmented with search and matching and ex-ante heterogeneity in terms of educational attainment. We show that monetary policy has stronger effects when the job market for the less educated and, hence, poorer workers is more volatile. The reason is that these workers have the most procyclical income coupled with the highest marginal propensity to consume. An expansionary monetary policy shock that increases labour demand disproportionally affects the labour market segment for the less educated, causing a strong increase in consumption. This further amplifies labour demand and increases the labour income of the poor even more, amplifying the initial effect. The same mechanism carries over to forward guidance.

Keywords Employment, Business Cycles, Monetary policy, Search and matching, Heterogeneous agents

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