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What are the effects of different borrower-based macroprudential tools when both real and nominal interest rates are low? We study this question in a New Keynesian model featuring long-term debt, housing transaction costs and a zero lower bound constraint on policy rates. We find that the...
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We study the role of monetary policy for the dynamics of U.S. mortgage debt, which is the largest component of … household indebtedness. A timevarying parameter VAR model allows us to study the variation in the mortgage debt sensitivity to … quantitatively similar to the VAR results. A sacrifice ratio for mortgage debt reveals that a policy tightening directed towards …
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