Research

WORKING PAPERS

Income Inequality, Mortgage Debt and House Prices,  under review

Bank of England Staff Working Paper No:921

Abstract: This paper studies housing and credit market implications of increasing income inequality and discusses how a low interest rate environment can alter its consequences. I develop an analytical general equilibrium model with a novel borrower risk composition channel of income inequality. Following a rise in income inequality, house prices and mortgage debt decline, and aggregate default risk increases. I then show that low real rates mitigate the depressing effect of inequality on house prices at the cost of amplifying the aggregate default risk. Using a panel of US states and instrumental variables approach, I verify the model’s predictions.

JEL codes: D31, E44, E58, G21, R21

RESEARCH IN PROGRESS

Global Banks and International Transmission of Financial Shocks

Understanding capital flows and shock transmission: a heterogeneous banks approach (with Ambrogio Cesa-Bianchi, Rusam Jamilov and Tommaso Monacelli)

Lenders’ Risk Taking and Monetary Policy (with Sinem Hacioglu- Hoke)

Targeted Financial Conditions Index (with Fernando Eguren Martin and Andrej Sokol)

The Role of Residential Security Maps in City Finances: The Long-term Effects of Redlining in the US (with Carlos Velmovitsky van Hombeeck and Valeria Rueda)

BLOG POSTS

Predicting Covid-19's impact on GDP: how can high-frequency data help us? (with Oliver Davies and Simon Whitaker) Bank Overground, October 2020

 No economy is an island: how foreign shocks affect UK macrofinancial stability (with Ambrogio Cesa-Bianchi, Rosie Dickinson, Simon Lloyd and Ed Manuel) Quarterly Bulletin 2021 Q3

OTHER PAPERS (pre-PhD working papers and publications)

Do We Really Need Filters In Estimating Output Gap? : Evidence From Turkey, 2013,  Working Papers 1333, Research and Monetary Policy Department, Central Bank of the Republic of Turkey (with Evren Erdogan Cosar and Cagri Sarikaya)

Short Term Inflation Forecasting Models for Turkey and a Forecast Combination Analysis, Economic Modeling, 2013.  (with Kurmas Akdogan, Selen Baser, Meltem Gülenay Chadwick, Dilara Ertug, Timur Hülagü, Fethi Ögünç, Utku Özmen and Necati Tekatlı)

Heterogeneity in Inflation Persistence and Optimal Monetary Policy, 2010 , Working Papers 1004, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.