Monetary Policy and Fertility: Housing Wealth Heterogeneity Across U.S. States

Richard Jaimes
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Richard Jaimes: Pontificia Universidad Javeriana

Vniversitas Económica, 2026, vol. 26, issue 1, No 1, 34 pages

Abstract: This paper estimates the effect of monetary policy surprises on fertility using a state-month panel of 51 U.S. states over 1990–2024. Interacting high-frequency surprises with the state homeownership rate under two-way fixed effects, I find that contrac-tionary surprises reduce birth rates significantly more in high-homeownership states: the differential is approximately 5 percent per standard deviation of exposure. The adjustable-rate mortgage origination share yields a null result, ruling out a payment adjustment channel and pointing instead to housing wealth. A parity decomposi-tion reveals that the effect is concentrated in higher-order births—approximately three times larger than for first births—indicating that existing homeowners, not prospective first-time buyers, drive the response. A semiparametric impulse response estimated at monthly horizons reveals that the fertility differential persists for at least 30 months without recovery, inconsistent with a pure conception-timing interpretation.

Keywords: Fertility; monetary policy; homeownership; housing wealth; birth rates (search for similar items in EconPapers)
JEL-codes: E52 J13 R31 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:col:000416:023134

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