{"title":"Role of Government Policies in Smoothing Borrowers’ Spending during Stress: Evidence from UK Mortgage Moratoria","authors":"Bruno Albuquerque, Alexandra Varadi","doi":"10.1057/s41308-024-00249-8","DOIUrl":null,"url":null,"abstract":"<p>We use UK transaction-level data to study whether nationwide mortgage moratoria, or payment holidays (PH), can act as a mechanism for smoothing mortgagors’ consumption following negative aggregate shocks. We find that both borrowers with pre-existing financial vulnerabilities and with stronger balance sheets, including buy-to-let investors, had an incentive to access the policy. This is not surprising since PH were available to all mortgagors and without affecting households’ credit risk scores. Using a quasi-experimental DiD research design based on eligibility, we find that the PH allowed liquidity-constrained households to smooth consumption during the pandemic relative to the control group. By contrast, other mortgagors did not seem to increase consumption relative to the control group, preferring to save the liquidity relief provided by PH. Overall, we find evidence that PH were able to support consumption of more vulnerable households, who are more likely to pull away from consumption during stress periods.</p>","PeriodicalId":47177,"journal":{"name":"Imf Economic Review","volume":"17 1","pages":""},"PeriodicalIF":3.3000,"publicationDate":"2024-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Imf Economic Review","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1057/s41308-024-00249-8","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
We use UK transaction-level data to study whether nationwide mortgage moratoria, or payment holidays (PH), can act as a mechanism for smoothing mortgagors’ consumption following negative aggregate shocks. We find that both borrowers with pre-existing financial vulnerabilities and with stronger balance sheets, including buy-to-let investors, had an incentive to access the policy. This is not surprising since PH were available to all mortgagors and without affecting households’ credit risk scores. Using a quasi-experimental DiD research design based on eligibility, we find that the PH allowed liquidity-constrained households to smooth consumption during the pandemic relative to the control group. By contrast, other mortgagors did not seem to increase consumption relative to the control group, preferring to save the liquidity relief provided by PH. Overall, we find evidence that PH were able to support consumption of more vulnerable households, who are more likely to pull away from consumption during stress periods.
我们利用英国交易层面的数据研究了全国范围内的抵押贷款暂停期或付款期（PH）是否可以作为一种机制，在负的总体冲击之后平滑抵押贷款人的消费。我们发现，无论是之前就存在金融脆弱性的借款人，还是资产负债表较强的借款人，包括购房出租投资者，都有动力利用该政策。这并不奇怪，因为 PH 适用于所有抵押贷款人，而且不会影响家庭的信贷风险评分。利用基于资格的准实验性 DiD 研究设计，我们发现相对于对照组而言，《公共健康保险》允许流动性受限的家庭在大流行期间平滑消费。相反，与对照组相比，其他抵押贷款者似乎并没有增加消费，而是更倾向于将私人保护计划提供的流动性缓解储蓄起来。总之，我们发现有证据表明，私人保护能够支持更脆弱家庭的消费，而这些家庭在压力时期更有可能放弃消费。
期刊介绍：
The IMF Economic Review is the official research journal of the International Monetary Fund (IMF). It is dedicated to publishing peer-reviewed, high-quality, context-related academic research on open-economy macroeconomics. It emphasizes rigorous analysis with an empirical orientation that is of interest to a broad audience, including academics and policymakers. Studies that borrow from, and interact with, other fields such as finance, international trade, political economy, labor, economic history or development are also welcome.
The views presented in published papers are those of the authors and should not be attributed to, or reported as, reflecting the position of the IMF, its Executive Board, or any other organization mentioned herein.
Comments
“The IMF Economic Review has been uniquely successful in publishing papers that rigorously analyze real international macroeconomic problems and in a manner that has immediate policy relevance. This success is owed to a great extent to the high quality of the editorial board, which is able to identify papers that are both relevant for policy and are executed using state-of-the-art tools so as to make the analysis compelling.” - Gita Gopinath, Economic Counsellor and Director of Research, IMF
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