Macroprudential Policy and Housing Wealth Inequality: Evidence from the Euro Area, with Álvaro Fernández-Gallardo (Bank of Spain).
We estimate the impact of macroprudential policy on housing wealth inequality among euro area households. We begin by employing narrative-identified macroprudential policy shocks within a local projection framework to identify the aggregate causal effects of these policies on credit and house prices in Germany, France, Italy, and Spain. Next, we distribute the aggregate effects across households through a reduced-form simulation using micro-level data from individual households. Our analysis evaluates three counterfactual scenarios following a policy shock: (i) households excluded from the housing market due to limited mortgage access, (ii) households affected by house price changes triggered by the policy shock, and (iii) a scenario that combines both mechanisms. Comparing net housing wealth across income quintiles against a baseline without regulation, we find that macroprudential policy reduces net housing wealth across income groups. Households in the middle income quintile experience the largest reductions, followed by bottom-income households and, finally, those in the top quintile, thereby increasing housing wealth inequality. We validate the simulation results using time-series measures of housing wealth inequality, highlighting the role of macroprudential policies in influencing wealth distribution.
Presented at: 1st Madrid Macro Mountain Conference 2025, 4th CEMLA/Dallas Fed Financial Stability Workshop 2025 , SAEe 2025.
Monetary policy has heterogeneous effects across U.S. regional housing markets. This paper shows that this heterogeneity is driven by time-varying local factors, such as housing supply elasticities and credit conditions. Using a two-step empirical strategy, I find that expansionary monetary policy produces larger house price increases in more supply-constrained MSAs, while construction activity responds more in more elastic markets. In addition, the response of local housing markets to monetary easing is stronger in regions where financial deregulation occurred earlier. These findings highlight the role of evolving local housing and financial conditions in shaping monetary policy transmission, with potential implications for housing affordability, local wealth effects, and geographically diversified real estate portfolios.
Presented at: XV Jornadas Internacionales de Política Económica 2021
Networked UK Housing Markets: Implications for Systemic Risk and Macroprudential Design, with Iván Payá (UA). Draft coming soon!
This paper studies systemic risk in the UK housing market by characterizing the evolving network of regional house prices. We adopt a connectivity measure based on time-varying Granger causality to track the strength, direction, and persistence of interregional spillovers. Connectivity displays a persistent upward drift, with periodic fluctuations over the sample, indicating an increasing potential for housing-market contagion. Decomposing connectivity into centrality and fragility reveals a stable structure: house prices in southern regions consistently lead house price movements in northern regions, Wales, Scotland, and Northern Ireland. Our analysis also uncovers a sharply differentiated role of London’s two sub-regions within the UK housing network. A key finding is that housing connectivity is counter-cyclical with the house price cycle. Linkages strengthen during downturns, implying that systemic fragility rises precisely when house prices are falling and balance sheets are under pressure, thereby heightening the scope for amplification mechanisms. In addition, housing-market connectivity exhibits no systematic association with regional business-cycle co-movement, a disconnect that may have consequences for housing affordability. Finally, we show that the transmission of macroprudential policy depends on the state of the housing network, operating in part through spillover channels embedded in regional connectedness. These results underscore housing connectivity as a state variable for financial stability and inform the design of macroprudential and broader stabilization policies.
Presented at: 4th CEMLA/Dallas Fed Financial Stability Workshop 2025.
The Unintended Consequences of COVID-19 on Human Capital Development: The Housing Channel, with Enrique Martínez-García (Dallas FED), Iván Payá (UA), and Tryg Aanenson (Dallas FED). Draft coming soon!
We study whether COVID-19 disrupted a pre-existing process of achievement convergence across U.S. public school districts. We adapt the beta-convergence framework from the economic growth literature to educational achievement, using SEDA data for nearly 6,000 districts over 2009--2024 in district fixed-effects panel models. We find strong pre-pandemic beta-convergence: districts with lower initial achievement experienced systematically faster gains over time. After COVID, this relationship weakens sharply, consistent with a structural break in catch-up dynamics. We also show that the post-COVID flattening of aggregate convergence does not reflect uniform losses, but rather a “hollowing out” of the middle of the distribution: middle-performing districts experienced the largest losses and downward mobility, while top-performing districts were more resilient. Finally, we test a housing-market amplification mechanism that can account for the post-pandemic break in convergence using 3.8 million CoreLogic transactions matched to school districts and time-varying measures of COVID restrictions, school closure mandates, learning modality, and effective mobility. Results show that stricter restrictions increased the house-price premium in areas served by pre-COVID higher-quality districts, consistent with intensified pandemic-era residential sorting and widening differences in local fiscal capacity. More broadly, the results suggest that school finance systems that rely heavily on local property tax bases may be particularly exposed to shock-induced divergence in recovery capacity.
The effects of monetary policy on income and wealth inequality in the US. Exploring different channels, with Juan-Francisco Albert (UV) and Antonio Peñalver (UMH). Structural Change and Economic Dynamics (2020), 55, 88-106.
We assess the effects of monetary policy shocks on income and wealth inequality through direct inequality measures and by analyzing several transmission channels explored in recent literature. Furthermore, we analyze two additional channels: the Housing and the Fiscal channels. The methodology adopted is a Bayesian proxy SVAR using a high-frequency identification based on the external instruments approach. Our own policy shocks are constructed for this purpose. The results show that an expansionary monetary policy shock does not have a significant effect on income inequality due to the existence of opposite channels, whereas it increases wealth inequality mainly through the portfolio channel.