Topic: Mortgages and Monetary Policy
Speaker: Finn E. Kydland, The Jeff Henley Professor of Economics at University of California- Santa Babara, Winner of 2004 Nobel Prize in Economics
Date: June 13th, 2014 (Fri.)
Time: 2:00pm-3:30pm
Location: Building 1, Room 100
Language: English
Abstract:
Mortgage loans are a striking example of a persistent nominal rigidity. As a result, under incomplete markets, monetary policy affects decisions through the cost of new mortgage borrowing and the value of payments on outstanding debt. Observed debt levels and payment to income ratios suggest the role of such loans in monetary transmission may be important. A general equilibrium model is developed to address this question. The transmission is found to be stronger under adjustable- than fixed-rate contracts. The source of impulse also matters: persistent inflation shocks have larger effects than cyclical fluctuations in inflation and nominal interest rates.
About the speaker:
Finn E. Kydland is a Norwegian economist. He is the Jeffrey Henley Professor of Economics at the University of California, Santa Barbara. His research focuses on economic cycle, monetary and fiscal policy and labor economics. Dr. Kydland was a co-recipient of the 2004 Nobel Memorial Prize in Economics (shared with Edward C. Prescott), "for their contributions to dynamic macroeconomics: the time consistency of economic policy and the driving forces behind business cycles".
Dr. Kydland is also a Richard P. Simmons Distinguished Professor at the Tepper School of Business of Carnegie Mellon University, where he earned his Ph.D. in economics in 1973, and an Adjunct Professor at the Norwegian School of Economics, and has held visiting scholar and professor positions at, among other places, the Hoover Institution and the Universidad Torcuato di Tella in Buenos Aires, Argentina. He is a Research Associate for the Federal Reserve Banks of Dallas, Cleveland and St. Louis, and a Senior Research Fellow at the IC2 Institute at the University of Texas at Austin.
