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The role of households' borrowing constraints in the transmission of monetary policy
- Publication Year :
- 2019
- Publisher :
- OFCE, 2019.
-
Abstract
- This paper investigates how the transmission of monetary policy to the real economy depends on the distribution of household debt. Using an original loan-level dataset covering the universe of UK mortgages, we assess the effect of monetary shocks on aggregate consumption by exploiting time variation in a measure of the proportion of households close to their borrowing constraint. We find that monetary policy is most potent when there is a large share of constrained households. In contrast, we find noevidence that the average level of borrowing relative-to-income of the household sector affects the transmission of monetary policy.
- Subjects :
- State-dependence
jel:E21
jel:E52
Mortgage debt
Heterogeneity
Distribution
jel:E58
Subjects
Details
- Language :
- English
- Database :
- OpenAIRE
- Accession number :
- edsair.od......3063..c5da988e0b2c5caa15468b191c73ab28