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The macroeconomic effects of Government asset purchases: evidence from postwar US housing credit policy

Fieldhouse, Andrew, Mertens, Karel and Ravn, Morten O. (2017) The macroeconomic effects of Government asset purchases: evidence from postwar US housing credit policy. CFM discussion paper series (CFM-DP2017-07). Centre For Macroeconomics, London, UK.

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Abstract

We document the portfolio activity of federal housing agencies and provide evidence on its impact on mortgage markets and the economy. Through a narrative analysis, we identify historical policy changes leading to expansions or contractions in agency mortgage holdings. Based on those regulatory events that we classify as unrelated to short-run cyclical or credit market shocks, we find that an increase in mortgage purchases by the agencies boosts mortgage lending and lowers mortgage rates. Agency purchases influence prices in other asset markets and stimulate residential investment. Using information in GSE stock prices to construct an alternative instrument for agency purchasing activity yields very similar results as our benchmark narrative identification approach.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.centreformacroeconomics.ac.uk/Home.aspx
Additional Information: © 2017 The Authors
Divisions: Centre for Macroeconomics
Subjects: H Social Sciences > HB Economic Theory
JEL classification: E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy (Targets, Instruments, and Effects)
G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation
N - Economic History > N2 - Financial Markets and Institutions > N22 - U.S.; Canada: 1913-
R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R38 - Government Policies; Regulatory Policies
Sets: Research centres and groups > Centre for Macroeconomics
Date Deposited: 12 Dec 2017 10:44
Last Modified: 29 Aug 2020 23:06
URI: http://eprints.lse.ac.uk/id/eprint/86167

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