Household Survey

Housing Markets and the Heterogeneous Effects of Monetary Policy Across the Euro Area

Monetary policy has heterogeneous effects across euro area countries. There are strong correlations between cross-country monetary policy potency and housing and mortgage market institutions, namely the share of adjustable-rate mortgages and the homeownership rate. To disentangle the relative importance of these institutions, I incorporate them into a quantitative currency-union New Keynesian model with rich household balance sheets. I calibrate the model to Spain and the euro area. The model fits well: the consumption response in Spain is 2.4 times stronger than the euro area in the model relative to 2.5 in the data. My results reveal that a higher adjustable-rate mortgage share and a higher homeownership rate interact to amplify the effects of monetary policy on economic activity due to smaller mortgage interest payments and a higher fraction of mortgaged homeowners operating in the market. I use the model to show that a banking union requiring shared financial regulation decreases the heterogeneous effects of monetary policy by weakening the pass-through to average mortgage interest rates. Finally, including house prices into the euro area price index stabilizes output at the cost of less stable goods inflation.

Household Beliefs Across Euro Area Countries During Covid-19

How do households across euro area countries plan their spending during the covid-19 pandemic? Making use of the Consumer Expectation Survey administered by the European Central Bank, we find that current balance sheets positions, as well as expectations about individual and aggregate variables, play an important role in household planned expenditures in durables. Expectations about both house price growth and inflation shape such plans, and these impacts have been changing during the course of the pandemic. An increase in the number of covid-related deaths in the region where households reside sharply decreases their planned expenditures over the following 12 months. Additionally, we uncover significant heterogeneity across education levels, age, and housing tenure.

Food Versus Non-Food Consumption Insurance in Uganda

Households’ income fluctuations in poor countries call for risk smoothing mechanisms, yet insurance is always found to be incomplete. We build a two-goods complete markets model, and confirm this result with the UNPS - a new representative Uganda household-level panel data. The empirical evidence suggests that the degree of consumption insurance differs across consumption goods: Households insure food better than other non-durables.