State Dependent Effects of Monetary Policy: the Refinancing Channel
Martin Eichenbaum (),
Sergio Rebelo () and
Arlene Wong ()
No 13223, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This paper studies how the impact of monetary policy depends on the dis- tribution of savings from refinancing mortgages. We show that the efficacy of monetary policy is state dependent, varying in a systematic way with the pool of potential savings from refinancing. We construct a quantitative dynamic life- cycle model that accounts for our findings. Motivated by the rapid expansion of Fintech, we study the impact of a fall in refinancing costs on the e cacy of monetary policy. Our model implies that as refinancing costs decline, the effects of monetary policy become less state dependent and more powerful.
Keywords: monetary policy; Mortgages; refinancing; state dependency (search for similar items in EconPapers)
JEL-codes: E52 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
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Working Paper: State Dependent Effects of Monetary Policy: the Refinancing Channel (2018)
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