Van Nieuwerburgh, Stijn; Koijen, Ralph S.J; Hemert, Otto Van - National Bureau of Economic Research (NBER) - 2007
exhibits a surprising amount of time variation. A simple utility framework of mortgage choice points to the bond risk premium … as theoretical determinant: when the bond risk premium is high, FRM payments are high, making ARMs more attractive. We … bond risk premium. This is true regardless of whether bond risk premia are measured using forecasters' data, a VAR term …