By Yannick Lucotte, Senior Lecturer, Laboratoire d'Economie d'Orléans, Université d'Orléans and Florian Pradines-Jobet, Associate Professor, PSB Paris School of Business, Department of Economics

The recent debates sparked by the decision of the Haut Conseil de Stabilité Financière (HCSF), the authority in charge of French macroprudential policy, to regulate mortgage lending conditions (Bénassy-Quéré, 2023) are a reminder of the complexity of conducting and justifying macroprudential policy. Indeed, while macroprudential policy is, by its very nature, intended to be counter-cyclical, the relevant authorities may find it difficult to steer it in the right direction at the right time. In this post, based on the results of our recent empirical study (Lucotte & Pradines-Jobet, 2023), we show that discretionary macroprudential policy must be conducted countercyclically to be fully effective.

Read more