Interest Rate Pass-Through: Mortgage Rates, Household Consumption, and Voluntary Deleveraging
Marco Di Maggio,
Benjamin J. Keys,
Amit Seru and
Vincent Yao ()
American Economic Review, 2017, vol. 107, issue 11, 3550-88
Exploiting variation in the timing of resets of adjustable-rate mortgages (ARMs), we find that a sizable decline in mortgage payments (up to 50 percent) induces a significant increase in car purchases (up to 35 percent). This effect is attenuated by voluntary deleveraging. Borrowers with lower incomes and housing wealth have significantly higher marginal propensity to consume. Areas with a larger share of ARMs were more responsive to lower interest rates and saw a relative decline in defaults and an increase in house prices, car purchases, and employment. Household balance sheets and mortgage contract rigidity are important for monetary policy pass-through.
JEL-codes: D12 D14 E43 E52 G21 R31 (search for similar items in EconPapers)
Note: DOI: 10.1257/aer.20141313
References: Add references at CitEc
Citations Track citations by RSS feed
Downloads: (external link)
https://www.aeaweb.org/articles/attachments?retrie ... FwimuTQj36w4Fok6m27i (application/zip)
https://www.aeaweb.org/articles/attachments?retrie ... UprKuw5c79mIcl3USLII (application/pdf)
https://www.aeaweb.org/articles/attachments?retrie ... 5jKMT-qxi1p3BjcviPwf (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:107:y:2017:i:11:p:3550-88
Ordering information: This journal article can be ordered from
Access Statistics for this article
American Economic Review is currently edited by Pinelopi Koujianou Goldberg
More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Series data maintained by Jane Voros ().