We document that increases in property insurance premiums reduce mortgage originations. The effect is strongest for the rate refinancing and cash-out refinancing segments. We show that denials associated with increased premiums are significantly more likely attributed to high debt-to-income...

How borrowers respond to future changes in the interest rate on their debt matters for the transmission of monetary policy and for household financial stability. Combining bank data, a letter RCT, and a survey, we study this question in the context of the German mortgage market, where since 2022...

Britain's debt was nil in 1688 and 60% of GDP in 1717. From 1717 to 1722 the debt was restructured, including through the South Sea operation of 1720. I discuss the reasons for the restructuring and the tensions it revealed between taxpayers and creditors. The South Sea bubble turned the...

Leveraging a unique dataset that combines country-level information on debt restructuring with firm-level data from theWorld Bank Enterprise Surveys (WBES) spanning from 2004 to 2023, we analyze the effects of debt restructuring on firm sales growth. Using recent advancements in...

Many people forgo substantial economic gains by not responding to financial incentives, even in major decisions such as retirement savings and mortgage refinancing. But do the same people systematically fail to respond across financial contexts? We study this using a quasi-experimental setting...

Many people forgo substantial economic gains by not responding to financial incentives, even in major decisions such as retirement savings and mortgage refinancing. But do the same people systematically fail to respond across financial contexts? We study this using a quasi-experimental setting...

This paper investigates the role of mortgage refinancing in shaping the estimates of marginal propensity to consume (MPC) and its implications for fiscal policy. Using U.S. household data, we find that MPCs decrease during the year of mortgage refinancing and stabilize afterwards, particularly...

Almost half of mortgage lending to homeowners in Denmark consists of 30-year fixed-rate loans. The loans are callable, so homeowners can redeem their loan and take out a new one if, for example, they want to refinance at a lower rate if interest rates fall. We calculate a financial incentive for...

This article reviews the discussion with respect to a justification of a non-neutral monetary policy and analyses design options for such a policy. The analysis is limited to refinancing operations and minimum reserve policy. Monetary policy with a green bias, while being controversially...

Under its Articles of Agreement, the Fund may only provide financing to assist members to resolve their balance of payments problems and restore medium-term external viability and may only do so under adequate safeguards. The Fund's inter-related policies on financing assurances, debt...

The aim of this note is to help stakeholders optimize their decision-making on when, where, and how to use debt-for-development swaps ("debt swaps"), ensuring they bring the intended benefits to all parties involved. It also proposes new approaches to structure these mechanisms, making them less...

We study sovereign external debt crises over the past 200 years, with a focus on creditor losses, or "haircuts". Our sample covers 327 sovereign debt restructurings with external private creditors over 205 default spells since 1815. Creditor losses vary widely (from none to 100%), but the...

This paper focuses on the significant growth of domestic credit once the debt is restructured, and shows that it is not correlated with the size of the haircut. Second, it performs an event study around Ecuador’s sovereign default and restructuring of 2008–2009 to study changes in domestic...

The Common Framework for Sovereign Debt Restructuring provides a process for easing debt burdens on low-income countries but has operated too slowly for the four countries that have so far sought relief under it. Official bilateral creditors that are not members of the Paris Club are often...

The Eurosystem implements its monetary policy through a set of monetary policy instruments (MPIs). The period covered by this report (2022-23) was dominated by high inflation, which led to a change from an easing to a tightening monetary policy environment in line with the mandate of the...

Commercial banks in some euro area member states hold large amounts of sovereign debt that offer a risk premium and hence higher yields than AAA-rated bonds issued by the most creditworthy countries. In particular, banks in vulnerable countries exhibit a bias towards domestically issued...

We develop and solve a dynamic optimization model of a bank's balance sheet, highlighting the critical factors influencing banks' optimization dynamics: balance sheet adjustment costs and the spreads between bank-specific lending and deposit rates and the interbank rate. We apply the model to...

Many sovereign defaults have occurred worldwide over the past 200 years. An analysis of 321 sovereign debt restructurings since 1815 shows that foreign private and institutional investor losses were 43 percent on average. Notably, beginning in the 1970s, several debt exchanges have increasingly...

Sovereigns issue debt on both domestic and foreign markets and the two debts are uncorrelated in the data. Sovereigns default mostly selectively. We propose a theory to rationalize these observations. A government chooses the optimal combination of two debts to smooth consumption, which is...

We present a theory of determinants of sovereign debt stability on foreign and domestic markets. Besides the two traditional factors - debt size and output contractions, we highlight the role of the third factor: distortionary tax, which hinders the government’s ability to freely raise...