Population aging and the transmission of monetary policy to consumption

Arlene Wong

No 716, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: Previous work has documented that housing and refinancing decisions play an important role in shaping the aggregate and cross-sectional consumption elasticities to interest rate shocks. New home purchases and refinances can then affect durable and non-durable consumption through the associated fluctuations in disposable income and the complementarity between housing and consumption. In this paper, we examine the transmission of monetary policy through housing debt. Specifically, we use detailed micro data to study the mortgage channel that links monetary policy with household borrowing and consumption expenditure. Specifically, we quantify the heterogeneity across borrowers and state-dependency in the pass-through of interest rate shocks to consumption over the Federal Reserve Bank’s interest rate cycle.

Date: 2016
New Economics Papers: this item is included in nep-age, nep-mac, nep-mon, nep-sog and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:716

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