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Mortgages, cash-flow shocks and local employment

Fergus Cumming

No 773, Bank of England working papers from Bank of England

Abstract: This paper quantifies the local impact of monetary policy through the cash-flow channel during the Crisis by combining novel micro datasets with near-universal coverage of UK mortgages and employment. I estimate that a reduction in mortgage payments equivalent to 1% of household income led to around a 5 percentage point increase in employment growth in non-tradable businesses the following year. But the spatial distribution of mortgage and labour market structures resulted in significant heterogeneity of this effect across the country. Taken at face value, the estimates suggest that the overall effect of accommodative monetary policy on total employment growth in 2010 varied by around 1.5 percentage points across regions.

Keywords: Mortgages; interest rates; monetary policy; employment (search for similar items in EconPapers)
JEL-codes: E21 E52 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-ure
Date: 2018-12-21
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0773

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