Central banks (CB) around the world are currently exploring the implications of issuing a new form of sovereign currency known as Central Bank Digital Currency (CBDC). Introducing CBDC is a compelling need for governments and CBs alike, as powerful private players have already taken the lead in...

The tilt effect was broadly studied in the 1970s and early 1980s, when inflation rates were rising rapidly and even reached the double digits, but scholars seemed to lose interest as inflation rates declined and central banks committed to price stability. However, the tilt effect is harmful even...

Economic output may drop for reasons related with supply, such as a fall in the number of the employed factors of production or increases in real costs; and for reasons related with demand, such as an increase in non-productive market power or a fall in aggregate demand, the worst type of...

A fully inflation-indexed economy stabilizes economic inter-temporal relationships and offers a set of potential benefits: hedging the economy against inflation; improving the performance of the financial system; helping to lessen the most common housing and economic recessions of developed...

Although economic theory suggests that inflation should not have any significant influence on real housing prices and activity, inflation variations are the main drivers of housing price variability (Tsataronis and Zhu, 2004) and increases in inflation have preceded housing and economic...

We use a model and show how inflation and mortgage loans based on nominal interest rates (NRMs), like FRMs, ARMs or IOs, are a source of instability for housing markets. NRMs allocate risk inappropriately and cause economic tensions due to the tilt effect (Lessard and Modigliani, 1975), the...

The most frequent mortgage loans in the US behave according to nominal interest rates with level loan payments (NRMs), like Fixed Rate Mortgages (FRMs) or Adjustable Rate Mortgages (ARMs). We use a model to show that the tilt effect, an increase of real payments in the early years of the...