TY  - UNPD
A1  - Yoo, Jinhyuk
T1  - Capital injection, to banks versus debt relief to households
T2  - Working paper series / Institute for Monetary and Financial Stability ; 111
N2  - I propose a dynamic stochastic general equilibrium model in which the leverage of borrowers as well as banks and housing finance play a crucial role in the model dynamics. The model is used to evaluate the relative effectiveness of a policy to inject capital into banks versus a policy to relieve households of mortgage debt. In normal times, when the economy is near the steady state and policy rates are set according to a Taylor-type rule, capital injections to banks are more effective in stimulating the economy in the long-run. However, in the middle of a housing debt crisis, when households are highly leveraged, the short-run output effects of the debt relief are more substantial. When the zero lower bound (ZLB) is additionally considered, the debt relief policy can be much more powerful in boosting the economy both in the short-run and in the longrun. Moreover, the output effects of the debt relief become increasingly larger, the longer the ZLB is binding.
T3  - Working paper series / Institute for Monetary and Financial Stability - 111 
KW  - capital injection to banks
KW  - debt relief to households
KW  - housing debt crisis
KW  - macrofinancial linkages
KW  - leverage
KW  - zero lower bound
Y1  - 2017
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/43157
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-431579
IS  - April 13, 2017
PB  - Johann Wolfgang Goethe-Univ., Inst. for Monetary and Financial Stability
CY  - Frankfurt am Main
ER  -