Refinancing, Monetary Policy, and the Credit Cycle

Gene Amromin, Neil Bhutta and Benjamin Keys

No 28039, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We assess the complicated reality of monetary policy transmission through mortgage markets by synthesizing the existing literature on the role of refinancing in policy implementation. After briefly reviewing mortgage market institutions in the U.S. and documenting refinance activity over time, we summarize the links between refinancing and consumption, and describe the frictions impeding the refinancing channel. The paper draws heavily on research emerging from the experience of the financial crisis of 2008-09, as it highlights a combination of market, institutional, and policy-making factors that dulled the transmission mechanism. We conclude with a discussion of potential mortgage market innovations, and the applicability of lessons learned to the ongoing stresses induced by the COVID-19 pandemic.

JEL-codes: D12 D14 E50 G21 G51 R31 (search for similar items in EconPapers)
Date: 2020-10
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-ure
Note: ME PE EH
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Citations: View citations in EconPapers (12)

Published as Gene Amromin & Neil Bhutta & Benjamin J. Keys, 2020. "Refinancing, Monetary Policy, and the Credit Cycle," Annual Review of Financial Economics, vol 12(1).

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Journal Article: Refinancing, Monetary Policy, and the Credit Cycle (2020)
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