Mortgage Cash-flows and Employment

Fergus Cumming

No 1922, Discussion Papers from Centre for Macroeconomics (CFM)

Abstract: This paper quantifies the impact of the cash-flow channel of monetary policy on employment by combining novel micro datasets with near-universal coverage. When policy interest rates fall, families with a mortgage spend the extra cash-flow in their local economy and this increases labor demand. Overall, a reduction in mortgage payments of £1,000 per household led to a 0.3 percentage point increase in locally non-tradable employment growth over three years of the Great Recession, with the most pronounced effects in the restaurant sector. Spatial variation in labor and mortgage market structures leads to regional heterogeneity in the traction of monetary policy.

Keywords: Employment; Interest rates; Monetary policy; Mortgages (search for similar items in EconPapers)
JEL-codes: E24 E52 G21 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2019-12
New Economics Papers: this item is included in nep-cba, nep-lab, nep-mac, nep-mon and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Mortgage cash-flows and employment (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:cfm:wpaper:1922

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