Essays in financial macroeconomics
2017-06
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Essays in financial macroeconomics
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2017-06
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This thesis studies two aspects of the U.S. housing and mortgages markets, in the context of a general equilibrium model with two types of households, lack of commitment, and equilibrium default. Chapter 1 measures the subsidy-equivalent cost of the U.S. housing policy that promotes the use of 30-year fixed-rate mortgages. Unlike other developed countries, the U.S. has an unusually high proportion of long-term fixed-rate mortgages (LFRMs), which is partly the result of government policies that drive down the interest rate of these mortgage products. The subsidy-equivalent cost is the minimum interest-rate subsidy such that, in the model, households choose LFRMs over short-term mortgages, as in the data. The resulting subsidy is around 23 basis points. Chapter 2 takes the subsidy on LFRMs and the contract itself as given, and explores the existence of allocations with lower debt levels that render both types of households better off. Specifically, I look for Pareto-improving allocations by setting a tax on mortgage coupon payments. I find that there exists an interval of positive (constant) taxes that implements strictly Pareto-improving allocations. Chapter 3 discusses the literature related to Chapters 1 and 2, and highlights my contributions.
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University of Minnesota Ph.D. dissertation. June 2017. Major: Economics. Advisors: Manuel Amador, Timothy Kehoe. 1 computer file (PDF); vi, 62 pages.
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Condor, Richard. (2017). Essays in financial macroeconomics. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/190451.
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