Regional Redistribution Through the U.S. Mortgage Market / Erik Hurst, Benjamin J. Keys, Amit Seru, Joseph S. Vavra.

Format:

Book

Author/Creator:

Hurst, Erik.

Contributor:

National Bureau of Economic Research.

Keys, Benjamin J.

Seru, Amit.

Vavra, Joseph S.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21007.

NBER working paper series no. w21007

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

Regional shocks are an important feature of the U.S. economy. Households' ability to self-insure against these shocks depends on how they affect local interest rates. In the United States, most borrowing occurs through the mortgage market and is influenced by the presence of government-sponsored enterprises (GSEs). We establish that despite large regional variation in predictable default risk, GSE mortgage rates for otherwise identical loans do not vary spatially. In contrast, the private market does set interest rates that vary with local risk. We use a spatial model of collateralized borrowing to show that the national interest rate policy substantially affects welfare by redistributing resources across regions.

Notes:

Print version record

March 2015.