Garriga, Carlos, Kydland, Finn E. and Šustek, Roman (2013) Mortgages and monetary policy. CFM discussion paper series (CFM-DP2013-6). Centre For Macroeconomics, London, UK.
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Abstract
Mortgage loans are a striking example of a persistent nominal rigidity. As a result, under incomplete markets, monetary policy affects decisions through the cost of new mortgage borrowing and the value of payments on outstanding debt. Observed debt levels and payment to income ratios suggest the role of such loans in monetary transmission may be important. A general equilibrium model is developed to address this question. The transmission is found to be stronger under adjustable- than fixed-rate contracts. The source of impulse also matters: persistent inflation shocks have larger effects than cyclical fluctuations in inflation and nominal interest rates.
| Item Type: | Monograph (Discussion Paper) |
|---|---|
| Official URL: | http://www.centreformacroeconomics.ac.uk/Home.aspx |
| Additional Information: | © 2013 The Authors |
| Divisions: | Centre for Macroeconomics |
| Subjects: | H Social Sciences > HG Finance |
| JEL classification: | E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations; Cycles 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 > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R21 - Housing Demand |
| Date Deposited: | 25 Jul 2014 08:18 |
| Last Modified: | 11 Dec 2024 19:12 |
| URI: | http://eprints.lse.ac.uk/id/eprint/58248 |
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