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
OTHER PAPERS (pre-PhD working papers and publications)
DISCUSSIONS
"Indebted Demand and The Savings Glut of the Rich" by Mian, Sufi and Straub, Bank of Korea International Conference 2022