MoNK: Mortgages in a New-Keynesian Model

Carlos Garriga (), Finn Kydland and Roman Sustek

No 2019-32, Working Papers from Federal Reserve Bank of St. Louis

Abstract: We propose a tractable framework for monetary policy analysis in which both short- and long-term debt affect equilibrium outcomes. This objective is motivated by observations from two literatures suggesting that monetary policy contains a dimension affecting expected future interest rates and thus the costs of long-term financing. In New-Keynesian models, however, long-term loans are redundant assets. We use the model to address three questions: what are the effects of statement vs. action policy shocks; how important are standard New- Keynesian vs. cash flow effects in their transmission; and what is the interaction between these two effects?

Keywords: Mortgages; cash-flow effects; sticky prices; monetary policy transmission; monetary policy communication (search for similar items in EconPapers)
JEL-codes: E52 G21 R21 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2019-10-25
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: MoNK: Mortgages in a New-Keynesian model (2021)
Working Paper: MoNK: Mortgages in a New-Keynesian Model (2019)
Working Paper: MoNK: Mortgages in a New-Keynesian Model (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:2019-032

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DOI: 10.20955/wp.2019.032

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