area countries (i.e. Germany, France, Italy, and Spain), with particular attention to the calibration of cross …

-section of individual bank portfolio decisions. For this purpose, an augmented version of the DSGE model of Gertler and Karadi … (2013), featuring a segmented banking sector, is estimated for the euro area and combined with a bank portfolio optimisation … approach using granular bank level data. An important feature of our modelling approach is that it captures the heterogeneity …

central bank asset purchases. The portfolio rebalancing frictions are calibrated to match the sovereign yield and exchange …

measures in a regulated banking environment. Based on an estimated DSGE model, we explore the interactions between central bank … asset purchases and bank capital-based financial policies (regulatory, supervisory or macroprudential) through its influence … on bank risk-shifting motives. We find that weakly-capitalised banks display excessive risk-taking which reinforces the …

in macroeconomic propagation, as well as the constraints that bank lending fragmentation would pose for monetary policy … with its cross-country heterogeneity within the euro area, focusing on Germany, France, Italy, Spain, and rest-of-euro area …