in macroprudential capital regulation. Our findings suggest a dichotomy between country groups. In peripheral countries … core countries, the cyclically adjusted primary balance ratio barely reacts to a sudden tightening in capital regulation. …

Banking regulation invites banks to gamble when buying government bonds that regulators consider to be risk-free. The … regulation in order to enhance their fiscal leeway. We examine an unintended side-effect of banking regulation, namely the zero … area periphery countries to a restrictive macroprudential capital regulation shock. We find that, unlike in the US, euro …