Hybrid Contracting in Repeated Interactions

Farzad Saidi (), Ulf Nielsson, Jesper Rangvid, Fabian Seyrich and Daniel Streitz

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: What stimulus payments replicate the consumption effect of a desired (but potentially infeasible) interest rate cut? Using granular full‐population administrative data, we estimate consumption responses to interest rate changes via adjustable‐rate mortgage resets and lump‐sum cash windfalls from unanticipated inheritances. Combining them, we map a 1 percentage point monetary‐policy rate decrease to equivalent uniform transfers of ~$1,000 per person paid over 5 years, totaling 1.3% of GDP. This estimate remains robust when accounting for heterogeneity in the cross‐sectional incidence of these macro‐equivalent policies. We find only modest heterogeneity in marginal propensities to consume, limiƟng efficiency gains from targeting transfers.

Keywords: marginal propensity to consume; monetary policy; fiscal policy; mortgages (search for similar items in EconPapers)
JEL-codes: D12 E21 E43 E52 E63 G51 H31 (search for similar items in EconPapers)
Pages: 69
Date: 2025-08
New Economics Papers: this item is included in nep-cba
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.crctr224.de/research/discussion-papers/archive/dp699 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bon:boncrc:crctr224_2025_699

Access Statistics for this paper

More papers in CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany Kaiserstr. 1, 53113 Bonn , Germany.
Bibliographic data for series maintained by CRC Office ().