Housing and the redistributive effects of monetary policy

Abstract

This thesis lays out a general equilibrium model, of which the main purpose is to measure redistributive effects between generations. To do so it builds up a lifecycle structure to introduce heterogeneity within the workers in the model, such that shocks affect different cohorts in a varied way. It separates housing from other consumption goods, and subjects agents to a downpayment constraint, which implies that they can only borrow, up to a certain fraction of their housing wealth. Redistributive effects of monetary policy shocks, which affect the model economy via the nominal interest rates of bonds, and in ation, are studied using Impulse Response Functions. The lifetime utility is employed as a measure of welfare redistribution. The analysis shows that the beneficiaries of these shocks and the subsequent reactions are elderly, wealthy households.