Annual Conference

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Household Finance

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May 2022

Human Frictions in the Transmission of Economic Policy

Michael WEBER , Francesco DACUNTO, Maritta PALOVIITA, Daniel HOANG
Many consumers below the top of the distribution of a representative population by cognitive abilities barely react to monetary and fiscal policies that aim to stimulate consumption and borrowing, even when they are financially unconstrained and despite substantial debt capacity. Differences in inco...
Keywords: Cognition, Behavioral Macroeconomics, Heterogeneous Agents, Fiscal and Monetary Policy, Beliefs, Red
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Annual Conference

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Household Finance

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May 2022

Political Voice and (Mortgage) Market Participation: Evidence from Minority Disenfranchisement

Arkodipta SARKAR, Nishant VATS, Seongjin PARK
This paper documents the link between political voice and economic decision-making. Combining the dilution of Section 5 of the Voting Rights Act as a shock to the enfranchisement of Black Americans with granular data on the US mortgage market, we document a 14.7% decline in mortgage origination for ...
Keywords: voting rights, mortgages, lending, race, discrimination, fear of rejection, homophily
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Annual Conference

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Household Finance

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May 2022

Strategically Staying Small: Regulatory Avoidance and the CRA

Jacelly CESPEDES, Jordan NICKERSON, Carlos PARRA
Using the introduction of an asset based two-tiered evaluation scheme in the 1995 CRA reform, we examine the consequences of regulatory avoidance. Banks exploit the attribute-based regulation by strategically slowing asset growth, bunching below the $250M threshold. The regulatory avoidance also pro...
Keywords: CRA, Financial Institutions, Regulatory Avoidance, Attribute-based Regulation
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Annual Conference

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Household Finance

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May 2022

Inflation and Individual Investors’ Behavior: Evidence from the German Hyperinflation

Fabio BRAGGION , Felix VON MEYERINCK, Nic SCHAUB
We analyze how individual investors respond to inflation. We introduce a unique dataset containing information on local inflation and security portfolios of more than 2,000 clients of a German bank between 1920 and 1924, covering the German hyperinflation. We find that individual investors buy less ...
Keywords: inflation, investor behavior, individual investors, behavioral biases, money illusion
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Annual Conference

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Household Finance

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May 2022

Housing Finance, Boom-Bust Episodes, and Macroeconomic Fragility

Carlos GARRIGA, Aaron HEDLUND
Using an equilibrium macro-housing model with incomplete markets, defaultable mortgage debt, and endogenous liquidity, this paper analyzes how institutional details of the housing finance system impact macroeconomic fragility and the magnitude of boom-bust episodes. With a focus on the recent U.S. e...
Keywords: Housing, Consumption, liquidity, Debt, Great Recession
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