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Essays in Financial Economics.

紀錄類型:	書目-語言資料,手稿 : Monograph/item
正題名/作者:	Essays in Financial Economics./
作者:	Cid Ortiz, Diego.
面頁冊數:	1 online resource (143 pages)
附註:	Source: Dissertations Abstracts International, Volume: 85-11, Section: A.
Contained By:	Dissertations Abstracts International85-11A.
標題:	Public policy. -
電子資源:	click for full text (PQDT)
ISBN:	9798382757810

Essays in Financial Economics.
Cid Ortiz, Diego.

Essays in Financial Economics. - 1 online resource (143 pages)

Source: Dissertations Abstracts International, Volume: 85-11, Section: A.

Thesis (Ph.D.)--Northwestern University, 2024.

Includes bibliographical references

The first chapter of this dissertation examines borrowers' prepayment behavior in Mexico's mortgage market, and its implications for monetary policy. I examine a dataset containing the universe of bank-originated mortgage loans from 2010 to 2019, showing that more than 50 percent of all 20-year fixed-rate loans are paid off in less than five years. Owners of multiple properties utilize pre-tax rental income for mortgage repayment, reducing their debt below the debt-to-income (DTI) and loan-to-value (LTV) constraints imposed by financial institutions. In this way, they can afford to borrow more for the acquisition of additional properties. Using an instrumental variable approach for exogenous changes in the monetary policy rate, I find a significant negative effect of mortgage rate changes on the mortgage prepayment probability. I construct an overlapping generations simulation model calibrated to Mexican data to show that both tax avoidance and the presence of DTI and LTV constraints are necessary to explain the mortgage prepayment and sequential property acquisition behavior observed in the data. In addition, the model suggests that this mechanism limits the impact of expansionary monetary policy: lower interest rates redirect savings of the high-income sectors toward property prepayment, rather than boosting consumption.The second chapter, coauthored with Kwok Yan Chiu and Pablo Sanchez Flores, addresses the following question: Would widespread credit access improve housing quality in developing countries? Using data from Mexico, we find a huge effect of credit access. Access to mortgage loans for households in the lowest-income decile is equivalent to raising their income to the middle-income decile in terms of improvement in housing quality. This correlation falls for high-income households. We present a heterogeneous-agent model with a discrete housing choice and borrowing constraint to match our empirical facts. In this model, low-income households are differentially affected by limited access to credit as they are more financially constrained. We use this model to study the effect of credit provision and find that housing quality can be improved by 10 percent if all households in Mexico are given access to mortgage loans.In the third chapter I present some historical facts and empirical regularities for the nation that would be considered the "hegemon" or center of the International Monetary System from the 19th century until the onset of the First World War: Great Britain. Notably, pre-war Britain obtained some form of exorbitant privilege in the form of excess returns of international assets with respect to domestic liabilities (akin to what is currently observed in the US) and an exorbitant duty during global recessions. However, recent developments indicate a divergence from this historical pattern, marked by negative current accounts and the emergence of a safety premium associated with the hegemonic currency, which can be attributed, in part, to the transition from gold reserves to contemporary international reserves managed by modern central banking institutions.

Electronic reproduction.
Ann Arbor, Mich. :
ProQuest,
2024

Mode of access: World Wide Web

ISBN: 9798382757810Subjects--Topical Terms:

1002398
Public policy.
Subjects--Index Terms:

Financial economicsIndex Terms--Genre/Form:

554714
Electronic books.

Essays in Financial Economics.
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520 $a The first chapter of this dissertation examines borrowers' prepayment behavior in Mexico's mortgage market, and its implications for monetary policy. I examine a dataset containing the universe of bank-originated mortgage loans from 2010 to 2019, showing that more than 50 percent of all 20-year fixed-rate loans are paid off in less than five years. Owners of multiple properties utilize pre-tax rental income for mortgage repayment, reducing their debt below the debt-to-income (DTI) and loan-to-value (LTV) constraints imposed by financial institutions. In this way, they can afford to borrow more for the acquisition of additional properties. Using an instrumental variable approach for exogenous changes in the monetary policy rate, I find a significant negative effect of mortgage rate changes on the mortgage prepayment probability. I construct an overlapping generations simulation model calibrated to Mexican data to show that both tax avoidance and the presence of DTI and LTV constraints are necessary to explain the mortgage prepayment and sequential property acquisition behavior observed in the data. In addition, the model suggests that this mechanism limits the impact of expansionary monetary policy: lower interest rates redirect savings of the high-income sectors toward property prepayment, rather than boosting consumption.The second chapter, coauthored with Kwok Yan Chiu and Pablo Sanchez Flores, addresses the following question: Would widespread credit access improve housing quality in developing countries? Using data from Mexico, we find a huge effect of credit access. Access to mortgage loans for households in the lowest-income decile is equivalent to raising their income to the middle-income decile in terms of improvement in housing quality. This correlation falls for high-income households. We present a heterogeneous-agent model with a discrete housing choice and borrowing constraint to match our empirical facts. In this model, low-income households are differentially affected by limited access to credit as they are more financially constrained. We use this model to study the effect of credit provision and find that housing quality can be improved by 10 percent if all households in Mexico are given access to mortgage loans.In the third chapter I present some historical facts and empirical regularities for the nation that would be considered the "hegemon" or center of the International Monetary System from the 19th century until the onset of the First World War: Great Britain. Notably, pre-war Britain obtained some form of exorbitant privilege in the form of excess returns of international assets with respect to domestic liabilities (akin to what is currently observed in the US) and an exorbitant duty during global recessions. However, recent developments indicate a divergence from this historical pattern, marked by negative current accounts and the emergence of a safety premium associated with the hegemonic currency, which can be attributed, in part, to the transition from gold reserves to contemporary international reserves managed by modern central banking institutions.
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653 $a Housing quality
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