@techreport{bf0768c8624844359e0612ff3445d17d,
title = "Mortgage Prepayment and Path-dependent Effects of Monetary Policy",
abstract = "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 prepayment and rate incentives, we argue that recent interest rate paths will generate substantial headwinds for future monetary stimulus.",
author = "Berger, {David W.} and Konstantin Milbradt and Fabrice Tourre and Joseph Vavra",
year = "2018",
doi = "10.3386/w25157",
language = "English",
series = "National Bureau of Economic Research. Working Paper Series",
publisher = "National Bureau of Economic Research (NBER)",
number = "25157",
address = "United States",
type = "WorkingPaper",
institution = "National Bureau of Economic Research (NBER)",
}