The Mortgage Credit Channel of Macroeconomic Transmission ∗

@inproceedings{Greenwald2016TheMC,
  title={The Mortgage Credit Channel of Macroeconomic Transmission ∗},
  author={Daniel Greenwald},
  year={2016}
}
I investigate how the structure of the mortgage market influences macroeconomic dynamics, using a general equilibrium framework with prepayable debt and a limit on the ratio of mortgage payments to income — features that prove essential to reproducing observed debt dynamics. The resulting environment amplifies transmission from interest rates into debt, house prices, and economic activity. Monetary policy more easily stabilizes inflation, but contributes to larger fluctuations in credit growth… CONTINUE READING
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