Mortgage Prepayment and Path-dependent Effects of Monetary Policy

David 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 loanlevel evidence on the relationship between prepayment and rate incentives, we argue that recent interest rate paths will generate substantial headwinds for future monetary stimulus.
OriginalsprogEngelsk
Publikationsdato2019
Antal sider58
StatusUdgivet - 2019
Begivenhed2019 Annual Meeting of the Society for Economic Dynamics - Washington University in St. Louis and Federal Reserve Bank of St. Louis, St. Louis, USA
Varighed: 27 jun. 201929 jul. 2019
https://www.sed2019stlouis.org/

Konference

Konference2019 Annual Meeting of the Society for Economic Dynamics
LokationWashington University in St. Louis and Federal Reserve Bank of St. Louis
LandUSA
BySt. Louis
Periode27/06/201929/07/2019
Internetadresse

Emneord

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

Citationsformater