Does Macroprudential Policy Affect Wealth Inequality? Evidence from Synthetic Controls

Using a dataset of 171 countries, I show that macroprudential policy (MaPP) exacerbates wealth inequality. I find that, after the adoption of MaPP, wealth concentration as measured by the Gini index increases by about 4.4 percentage points relative to a synthetic control country without MaPP. This is explained by an upsurge in the wealth share of the top 1 percent combined with a sharp decline in the bottom 50 percent. These effects vary considerably with the policy tool and the country income level