Monetary Policy when Households have Debt: New Evidence on the Transmission Mechanism

Using household survey data for the U.S. and the U.K., we show that the aggregate response of consumption to interest rate changes is driven by households with a mortgage. Outright home-owners do not adjust expenditure at all while renters change their spending but by less than mortgagors. Income ri...

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Bibliographic Details
Published in:The Review of economic studies 2020-01, Vol.87 (1 (312)), p.102-129
Main Authors: CLOYNE, JAMES, FERREIRA, CLODOMIRO, SURICO, PAOLO
Format: Article
Language:English
Subjects:
Aggregate demand
Consumption
Expenditures
Heterogeneity
Home financing
Home ownership
Households
Housing
Housing tenure
Income
Interest rates
Monetary policy
Owners
Tenants
Wealth
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