Research

Working Papers

Heterogeneous Effects of Macroprudential Policies (co-authored with Hyundo Joo.) 

The latest version of the working paper can be downloaded here

Literature on macroprudential  policy effects often does not consider the policy-affected groups. This paper discovers a previously less noticed side of leverage cap macroprudential policy effects: former owners' reaction toward the policy tightening. By exploiting regional treatments of tightening LTV/DTI limits in recent years in Korea, we show that old owners who purchased housing assets and originated mortgages before the policy changes also voluntarily reduced leverage after the policy tightening. Further, we offer that delinquency and default became more vulnerable among the old owners when they faced stricter mortgage standards. We present a theoretical model suggesting that households could get more constrained in liquidity due to the loss of cashing out opportunities, which nudge them to default in more minor economic shocks.

Work in progress