Work

Sources of Inaction in Household Finance: Evidence from the Danish Mortgage Market

Year: 2015

Type: report

Abstract: We build an empirical model to decompose delays in mortgage refinancing into time-dependent inaction (a low probability of responding to a refinancing incentive in a given quarter) and statedependent inaction (a psychological addition to the financial cost of refinancing).We estimate the model on high-quality administrative panel data from Denmark, where mortgage refinancing without cash-out is unconstrained.Middle-aged and wealthy households exhibit state-dependent inaction; but older, poorer, and less-educated households exhibit strong time-dependent inaction and thereby achieve lower savings.We use the model to understand frictions in the mortgage channel of monetary policy transmission.

Source: National Bureau of Economic Research

DOI: 10.3386/w21386

Authors: Steffen Andersen, John Campbell, Kasper Meisner Nielsen, Tarun Ramadorai

Institutions: Copenhagen Business School, Harvard University, Hong Kong University of Science and Technology, Imperial College London

Language: English

Topic: Housing Market and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W4230189606

Cites: 84

Cited by: 55

Related to: 10