Publications [#344907] of David Berger

Journal Articles

1. Berger, D; Milbradt, K; Tourre, F; Vavra, J, Mortgage prepayment and path-dependent effects of monetary policy, American Economic Review, vol. 111 no. 9 (September, 2021), pp. 2829-2878, American Economic Association [doi]
   (last updated on 2024/04/23)

   Abstract:
   How much ability does the Fed have to stimulate the economy by cutting interest rates? We argue that the presence of substantial debt in fixed- rate, prepayable mortgages means that the ability to stimulate the economy by cutting interest rates depends not just on their current level but also on their previous path. Using a household model of mortgage prepayment matched to detailed loan- level evidence on the relationship between prepayment and rate incentives, we argue that recent interest rate paths will generate substantial headwinds for future monetary stimuli.