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I am a Postdoctoral Researcher at the Department of Economics at Lund University and Knut Wicksell Centre for Financial Studies. My research is in the intersection of finance and macroeconomics, where I use microdata to study consumption, housing and mortgages. I also do work in alternative work arrangements and in the effect of social networks on investment behaviour.

If you have any links that would be useful for PhD students or junior researchers, please let me know!

Contact information

claes.backman@nek.lu.se

Office: Alfa 1, room 4030, Department of Economics, Lund University

Interest-Only Mortgages and Consumption Growth: Evidence from a Mortgage Market Reform

We use detailed household-level data from Denmark to show that the introduction of interest-only mortgages allowed households constrained by their mortgage payments to increase consumption and borrowing. Using an ex-ante measure of exposure motivated by theories of financial constraints, we show that households with higher exposure were more likely to refinance to an IO mortgage and that they increased their consumption more following the reform. We find that interest-only mortgages are popular across the income and age distribution, suggesting a relaxation of payment to income constraints affects a large share of the population. Finally, we find that housing wealth effects and labor market dynamics are unlikely to explain our results.

Higher consumption growth for households more likely to benefit from IO mortgages after their introduction in 2003
Three main results in graph: 1. Lack of pre-trends based on exposure prior to 2004 (when IO mortgages were introduced)2. Increasing consumption for individuals with higher exposure after reform.3. No reversal as housing and labor markets decline in 2007

The Impact of IO Mortgages on Affordability

Accepted at Regional Science and Urban Economics

We show that the legalisation of interest-only (IO) mortgage had no impact on homeownership rates in Denmark. IO mortgages made up approximately 60 percent of outstanding mortgage debt, with similar shares across the age, wealth and income distribution. We argue that the mortgage reform led to an increase in purchasing power across all buyers, leading to no change in who purchased housing. Instead, house prices rose, negating any positive impact on affordability.

No impact on homeownership rates after mortgage reform in 2003 (red line)


The Geography of Alternative Work

The increase in alternative working arrangements has sparked a debate over the positive impact of increased flexibility against the negative impact of decreased financial security. We study the prevalence and determinants of intermediated work in order to document the relative importance of the arguments for and against this recent labor market trend. We link data on individual participation and losses from a Federal Trade Commission settlement with a Multi-Level Marketing firm with detailed county-level information. Participation is greater in middle-income areas and in areas where female labor market non-participation is higher, suggesting that flexibility offers real benefits. However, losses from MLM participation are higher in areas with lower education levels and higher income inequality, suggesting that the downsides of alternative work are particularly high in certain demographics. Our results illustrate that the advantages and disadvantages of alternative work arrangements accrue to different groups.

MLM participation across the United States - data from 350,000 settlement checks