Home > Publications . Search All . Browse All . Country . Browse PSC Pubs . PSC Report Series

PSC In The News

RSS Feed icon

Kusunoki, Hall, and Barber find obese teen girls less likely to use birth control

Prescott finds reported sex offenses lower in neighborhoods with resident sex offenders

Geronimus says poor Detroiters face greater health risks given adverse social conditions

Highlights

Bob Willis awarded 2015 Jacob Mincer Award for Lifetime Contributions to the Field of Labor Economics

David Lam is new director of Institute for Social Research

Elizabeth Bruch wins Robert Merton Prize for paper in analytic sociology

Elizabeth Bruch wins ASA award for paper in mathematical sociology

Next Brown Bag

PSC Brown Bags will be back fall 2015


Home is where the equity is: Mortgage refinancing and household consumption

Publication Abstract

Hurst, E., and Frank P. Stafford. 2004. "Home is where the equity is: Mortgage refinancing and household consumption." Journal of Money Credit and Banking, 36(6): 985-1014.

Applying a permanent income model with exogenous liquidity constraints and mortgage behavior, household refinancing when mortgage interest rates are historically high and rising, a persistent empirical puzzle, is explained. Using data from the Panel Study of Income Dynamics, households experiencing an unemployment shock and having limited initial liquid assets to draw upon are shown to have been 25% more likely to refinance, 1991-94. On average, such liquidity-constrained households converted over two-thirds of every dollar of equity they removed into current consumption as mortgage rates plummeted, 1991-94, producing an estimated expenditure stimulus of at least $28 billion.

Browse | Search : All Pubs | Next