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.
Originalsprog | Engelsk |
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Publikationsdato | 2019 |
Antal sider | 58 |
Status | Udgivet - 2019 |
Begivenhed | Consumer Finance: Micro and Macro Approaches - Becker Friedman Institute, University of Chicago, Chicago, USA Varighed: 10 maj 2019 → 11 maj 2019 https://bfi.uchicago.edu/event/consumer-finance-micro-and-macro-approaches/ |
Konference
Konference | Consumer Finance: Micro and Macro Approaches |
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Lokation | Becker Friedman Institute, University of Chicago |
Land | USA |
By | Chicago |
Periode | 10/05/2019 → 11/05/2019 |
Internetadresse |
Emneord
- Monetary policy
- Path-dependence
- Refinancing
- Mortgage debt