Mortgage Prepayment and Path-Dependent Effects of Monetary Policy

David W. Berger, Konstantin Milbradt, Fabrice Tourre, Joseph Vavra

Publikation: KonferencebidragPaperForskningpeer review

Abstrakt

How much ability does the Fed have to stimulate the economy by cutting interest rates? We argue that the presence of substantial debt in fixed-rate, prepayable mortgages means that the ability to stimulate the economy by cutting interest rates depends not just on their current level but also on their previous path. Using a household model of mortgage prepayment matched to detailed loan-level evidence on the relationship between repayment and rate incentives, we argue that recent interest rate paths will generate substantial headwinds for future monetary stimulus.
OriginalsprogEngelsk
Publikationsdato2019
Antal sider58
StatusUdgivet - 2019
BegivenhedConsumer Finance: Micro and Macro Approaches - Becker Friedman Institute, University of Chicago, Chicago, USA
Varighed: 10 maj 201911 maj 2019
https://bfi.uchicago.edu/event/consumer-finance-micro-and-macro-approaches/

Konference

KonferenceConsumer Finance: Micro and Macro Approaches
LokationBecker Friedman Institute, University of Chicago
LandUSA
ByChicago
Periode10/05/201911/05/2019
Internetadresse

Emneord

  • Monetary policy
  • Path-dependence
  • Refinancing
  • Mortgage debt

Citationsformater