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The Effects of the Saving and Banking Glut on the U.S. Economy

Justiniano, Alejandro; Primiceri, Giorgio E.; … - Federal Reserve Bank of Chicago - 2013

We use a quantitative equilibrium model with houses, collateralized debt and foreign borrowing to study the impact of global imbalances on the U.S. economy in the 2000s. Our results suggest that the dynamics of foreign capital flows account for between one fourth and one third of the increase in...

Persistent link: https://www.econbiz.de/10010735412

What Drives Bank Funding Spreads?

King, Thomas B.; Lewis, Kurt F. - Federal Reserve Bank of Chicago - 2014

at several maturities into components reflecting counterparty credit risk and funding-market liquidity. To account for … longer maturities, credit risk explains much of the time variation in Libor, reflecting in part fluctuations in the degree to … which default risk is priced in the interbank market. Our results are consistent with banks both under- and over …

Persistent link: https://www.econbiz.de/10011119884

Access to Refinancing and Mortgage Interest Rates: HARPing on the Importance of Competition

Amromin, Eugene; Kearns, Caitlin - Federal Reserve Bank of Chicago - 2014

We explore a policy-induced change in borrower ability to shop for mortgages to investigate whether market competitiveness affects mortgage interest rates. Our paper exploits a discontinuity in the competitive landscape introduced by the Home Affordable Refinancing Program (HARP). Under HARP,...

Persistent link: https://www.econbiz.de/10011119887

Preventing Bank Runs

Andolfatto, David; Nosal, Ed; Sultanum, Bruno - Federal Reserve Bank of Chicago - 2014

Diamond and Dybvig (1983) is commonly understood as providing a formal rationale for the existence of bank-run equilibria. It has never been clear, however, whether bank-run equilibria in this framework are a natural byproduct of the economic environment or an artifact of suboptimal contractual...

Persistent link: https://www.econbiz.de/10011099905

Credit Supply and the Housing Boom

Justiniano, Alejandro; Primiceri, Giorgio E.; … - Federal Reserve Bank of Chicago - 2014

The housing boom that preceded the Great Recession was due to an increase in credit supply driven by looser lending constraints in the mortgage market. This view on the fundamental drivers of the boom is consistent with four empirical observations: the unprecedented rise in home prices and...

Persistent link: https://www.econbiz.de/10011099908

Policy Intervention in Debt Renegotiation: Evidence from the Home Affordable Modification Program

Agarwal, Sumit; Amromin, Eugene; Ben-David, Itzhak; … - Federal Reserve Bank of Chicago - 2013

The main rationale for policy intervention in debt renegotiation is to enhance such activity when foreclosures are perceived to be inefficiently high. We examine the ability of the government to influence debt renegotiation by empirically evaluating the effects of the 2009 Home Affordable...

Persistent link: https://www.econbiz.de/10011027197