OxTalks will soon move to the new Halo platform and will become 'Oxford Events.' There will be a need for an OxTalks freeze. This was previously planned for Friday 14th November – a new date will be shared as soon as it is available (full details will be available on the Staff Gateway).
In the meantime, the OxTalks site will remain active and events will continue to be published.
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This paper studies the role of real estate wealth concentration for the macroeconomic impact of governments inducing banks to hold domestic sovereign debt. We build a model featuring housing, heterogeneous agents and banks optimizing their portfolio subject to financial frictions. A moral suasion shock, shifting banks’ assets from mortgages to bonds, lowers public borrowing costs while increasing private ones, crowding out household lending and increasing inequality. Real estate wealth concentration, affecting banks deposits, amplifies this effect. A hypothetical regulation limiting banks’ exposure to sovereign bonds reverses the adverse impact of moral suasion on private lending and inequality.
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