Work

Why do prices rise faster than they fall? With an application to mortgage rates

Year: 2007

Type: article

Abstract: Empirical literature shows that prices respond asymmetrically to cost changes in many markets, rising faster than falling. An example is the mortgage rate, which follows an increase in capital market rates faster than a decrease. We examine various theoretical explanations for asymmetric price adjustments in general and discuss their validity for the mortgage rate. We show that in The Netherlands mortgage rates indeed respond asymmetrically to changes in capital market rates and consider the relevance of theoretical explanations for this particular market. Copyright © 2007 John Wiley & Sons, Ltd.

Source: Managerial and Decision Economics

DOI: 10.1002/mde.1382

Authors: Linda A. Toolsema, Jan P. A. M. Jacobs

Institution: University of Groningen

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funder: Rijksuniversiteit Groningen

OpenAlex ID: W2147146601

FWCI: 3.885

Cites: 24

Cited by: 37

Related to: 10