Heterogeneous Spillovers of Housing Credit Policy

Myroslav Pidkuyko

Review of Economic Dynamics, 2023, vol. 51, 39-59

Abstract: We study the spillovers from government intervention in the mortgage market on households' consumption. Expansionary credit policy increases the consumption of homeowners with mortgage debt significantly, while the consumption response of homeowners without mortgage debt is small and insignificant. Non-homeowners also increase their consumption but less than mortgagors. We also find heterogeneous responses of households of different ages. We explain these facts through a life-cycle model with incomplete markets and endogenous housing choice. Downward pressure on the credit and interest rates creates extra wealth for the mortgagors via the refinancing channel. (Copyright: Elsevier)

Keywords: Mortgage debt; Life-cycle models; Government-sponsored enterprises; Credit policy (search for similar items in EconPapers)
JEL-codes: E21 E44 G28 R38 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1016/j.red.2022.11.005

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