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Mortgage Design and Slow Recoveries: The Role of Recourse and Default

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dc.contributor.authorGete, Pedro
dc.contributor.authorZecchetto, Franco
dc.contributor.funderMinisterio de Ciencia, Innovación y Universidades
dc.contributor.funderAgencia Estatal de Investigación
dc.contributor.rorhttps://ror.org/02jjdwm75
dc.date.accessioned2024-10-23T11:50:29Z
dc.date.available2024-10-23T11:50:29Z
dc.date.issued2023-05-12
dc.description.abstractWe show that mortgage recourse systems, by discouraging default, magnify the impact of nominal rigidities. They cause deeper and more persistent recessions. This mechanism can account for up to 31% of the recovery gap during the Great Recession between the U.S., mostly a non-recourse economy, and Spain, a recourse economy. General equilibrium effects explain most of the differences between mortgage systems. With recourse, highly indebted homeowners dramatically cut consumption in a crisis, and account for a larger share of the aggregate consumption decline. However, without recourse, mortgages would be more expensive for riskier households, and homeownership rates would be lower.
dc.description.peerreviewedyes
dc.description.sponsorshipAsociación Mexicana de Cultura, A.C.
dc.description.statusPublished
dc.formatapplication/pdf
dc.identifier.citationPedro Gete, Franco Zecchetto, Mortgage Design and Slow Recoveries: The Role of Recourse and Default, The Review of Economic Studies, Volume 91, Issue 2, March 2024, Pages 1039–1084, https://doi.org/10.1093/restud/rdad055
dc.identifier.doi10.1093/restud/rdad055
dc.identifier.issn1467-937X
dc.identifier.urihttps://hdl.handle.net/20.500.14417/3297
dc.issue.number2
dc.journal.titleThe Review of Economic Studies
dc.language.isoen
dc.page.final1084
dc.page.initial1039
dc.page.total45
dc.publisherOxford University Press
dc.relation.departmentFinance
dc.relation.entityIE University
dc.relation.projectIDMCIN /AEI /10.13039/501100011033 / FEDER
dc.relation.projectIDPID2021-125359NB-I00
dc.relation.schoolIE Business School
dc.rightsAttribution-NonCommercial-NoDerivatives 4.0 International
dc.rights.accessRightsinfo:eu-repo/semantics/openAccess
dc.rights.urihttps://creativecommons.org/licenses/by-nc-nd/4.0/
dc.subject.keywordAggregate demand
dc.subject.keywordConsumption
dc.subject.keywordDefault
dc.subject.keywordEurope
dc.subject.keywordForeclosures
dc.subject.keywordHousing
dc.subject.keywordLiquidity Traps
dc.subject.keywordMortgages
dc.subject.keywordNominal Rigidities
dc.subject.keywordRecourse
dc.subject.keywordRecovery
dc.titleMortgage Design and Slow Recoveries: The Role of Recourse and Default
dc.typeinfo:eu-repo/semantics/article
dc.version.typeinfo:eu-repo/semantics/acceptedVersion
dc.volume.number91
dspace.entity.typePublication
relation.isAuthorOfPublication627e06b8-d61f-4611-96fe-15cf32670e9f
relation.isAuthorOfPublication.latestForDiscovery627e06b8-d61f-4611-96fe-15cf32670e9f
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