The Macroeconomic Effects of Government Asset Purchases: Evidence from Postwar US Housing Credit Policy

Andrew Fieldhouse, Karel Mertens and Morten Ravn

No 1707, Discussion Papers from Centre for Macroeconomics (CFM)

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.

Keywords: Credit Policy; Monetary Policy; Mortgage Credit; Residential Investment; Government Sponsored Enterprises (search for similar items in EconPapers)
JEL-codes: E44 E52 G28 N22 R38 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2017-01
New Economics Papers: this item is included in nep-ban and nep-mac
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Citations: View citations in EconPapers (15)

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Related works:
Journal Article: The Macroeconomic Effects of Government Asset Purchases: Evidence from Postwar U.S. Housing Credit Policy (2018)
Working Paper: The Macroeconomic Effects of Government Asset Purchases: Evidence from Postwar US Housing Credit Policy (2017)
Working Paper: The macroeconomic effects of Government asset purchases: evidence from postwar US housing credit policy (2017)
Working Paper: The Macroeconomic Effects of Government Asset Purchases: Evidence from Postwar US Housing Credit Policy (2017)
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