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Lam looks at population and development in next 15 years in UN commission keynote address

Mitchell et al. find harsh family environments may magnify disadvantage via impact on 'genetic architecture'

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Raghunathan appointed director of Survey Research Center

PSC newsletter spring 2014 issue now available

Kusunoki wins faculty seed grant award from Institute for Research on Women and Gender

2014 PAA Annual Meeting, May 1-3, Boston

Next Brown Bag

Monday, April 21
Grant Miller: Managerial Incentives in Public Service Delivery

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.

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