Journal ArticleDOI
Household Balance Sheets, Consumption, and the Economic Slump*
Atif Mian,Kamalesh Rao,Amir Sufi +2 more
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In this article, the authors use the highly unequal geographic distribution of wealth losses across the United States to estimate a large elasticity of consumption with respect to housing net worth of 0.6 to 0.8, which soundly rejects the hypothesis of full consumption risk sharing.Abstract:
lapse using the highly unequal geographic distribution of wealth losses across the United States. We estimate a large elasticity of consumption with respect to housing net worth of 0.6 to 0.8, which soundly rejects the hypothesis of full consumption risk-sharing. The average marginal propensity to consume (MPC) out of housing wealth is 5–7 cents with substantial heterogeneity across ZIP codes. ZIP codes with poorer and more levered households have a significantly higher MPC out of housing wealth. In line with the MPC result, ZIP codes experiencing larger wealth losses, particularly those with poorer and more levered households, experience a larger reduction in credit limits, refinancing likelihood, and credit scores. Our findings highlight the role of debt and the geographic distribution of wealth shocks in explaining the large and unequal decline in consumption from 2006 to 2009. JEL Codes: E21, E32, E44, E60.read more
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Discussant Comments on: Leverage, Business Cycles and Monetary Policy, by Brunnermeier and Sannikov
TL;DR: In this article, a discussion of deleveraging and balance sheet issues is presented, and the authors discuss their own research in that regard. But they do not discuss the authors' work in this paper.
Journal ArticleDOI
The Problem Has Existed over Endless Years: Racialized Difference in Commuting, 1980–2019
TL;DR: The authors found that Black commuters spent 49 more minutes commuting per week in 1980 than White commuters, and this difference declined to 22 minutes per week by 2019, due to two factors: Black workers are more likely to commute by transit, and Black workers make up a larger share of the population in cities with long average commutes.
Report SeriesDOI
Does Getting a Mortgage Affect Credit Card Use
Scott L. Fulford,Joanna Stavins +1 more
TL;DR: In this paper, the authors find that a new mortgage acquisition has a robust and statistically significant positive effect on credit card utilization, which is defined as the fraction of a consumer's credit card limit that is used.
Journal ArticleDOI
OUP accepted manuscript
TL;DR: In this paper , the authors investigate how consumers respond to an unexpected interest rate decrease that automatically reduces interest expenses for all mortgage borrowers in the country and thereby generates significant positive disposable income shocks.
Journal ArticleDOI
House Prices, Monetary Policy and Commodities: Evidence from Australia*
James Graham,Alistair Read +1 more
TL;DR: The authors used the heterogeneity in house price responses to study the different channels through which monetary policy and commodity price shocks have significant effects on housing markets through income channels.
References
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Journal ArticleDOI
Optimum consumption and portfolio rules in a continuous-time model☆
TL;DR: In this paper, the authors considered the continuous-time consumption-portfolio problem for an individual whose income is generated by capital gains on investments in assets with prices assumed to satisfy the geometric Brownian motion hypothesis, which implies that asset prices are stationary and lognormally distributed.
Posted Content
Agency Costs, Net Worth, And Business Fluctuations
Ben S. Bernanke,Mark Gertler +1 more
TL;DR: The authors constructs a simple neoclassical model of intrinsic business cycle dynamics in which borrowers' balance sheet positions play an important role and shows that the agency costs of undertaking physical investments are inversely related to the entrepreneur's/borrower's net worth.
Posted ContentDOI
Agency Costs, Net Worth, and Business Fluctuations.
Mark Gertler,Ben S. Bernanke +1 more
TL;DR: The authors developed a simple neoclassical model of the business cycle in which the condition of borrowers' balance sheets is a source of output dynamics, and the mechanism is that higher borrower net worth reduces the agency costs of financing real capital investments.
Journal ArticleDOI
Home Bias at Home: Local Equity Preference in Domestic Portfolios
TL;DR: The authors showed that the strong bias in favor of domestic securities is a well-documented characteristic of international investment portfolios, yet the preference for investing close to home also applies to portfolios of domestic stocks.
Book ChapterDOI
Optimum Consumption and Portfolio Rules in a Continuous-Time Model*
TL;DR: In this paper, the authors considered the continuous-time consumption-portfolio problem for an individual whose income is generated by capital gains on investments in assets with prices assumed to satisfy the geometric Brownian motion hypothesis, which implies that asset prices are stationary and lognormally distributed.
Related Papers (5)
House Prices, Home Equity-Based Borrowing, and the U.S. Household Leverage Crisis
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Debt, Deleveraging, and the Liquidity Trap: A Fisher-Minsky-Koo Approach*
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The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis
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