Monetary policy can harm its own transmission – IMF paper
Impact on mortgage choices means easing can weaken pass-through in future
Rates decisions alter the transmission mechanism and can make monetary policy less effective by shifting the composition of the mortgage market, research by the International Monetary Fund finds.
The authors, Alessia De Stefani and Rui Mano, gathered data on mortgage flows in 27 economies and mortgage stocks in 35 economies. They use their dataset to identify the causal effects of rate decisions on the mortgage market and the macroeconomy.
Their working paper presents evidence that monetary easing
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