Add literature context to HKMOHousingChannelMP

.gitignore

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 # Mac
 .DS_Store
+
+# Local editor / Anaconda project artifacts
+anaconda_projects/

models/We-Would-Like-In-Econ-ARK/HKMOHousingChannelMP/MP-Housing-Channel.bib

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+@ARTICLE{Auclert2019-ch,
+  title     = "Monetary policy and the redistribution channel",
+  author    = "Auclert, Adrien",
+  journal   = "Am. Econ. Rev.",
+  publisher = "American Economic Association",
+  volume    =  109,
+  number    =  6,
+  pages     = "2333--2367",
+  abstract  = "This paper evaluates the role of redistribution in the
+               transmission mechanism of monetary policy to consumption. Three
+               channels affect aggregate spending when winners and losers have
+               different marginal propensities to consume: an earnings
+               heterogeneity channel from unequal income gains, a Fisher channel
+               from unexpected inflation, and an interest rate exposure channel
+               from real interest rate changes. Sufficient statistics from
+               Italian and US data suggest that all three channels are likely to
+               amplify the effects of monetary policy. (JEL E21, E31, E43, E52)",
+  month     =  jun,
+  year      =  2019,
+  language  = "en"
+}
+
+@ARTICLE{Attanasio2009-tp,
+  title     = "Booms and busts: Consumption, house prices and expectations",
+  author    = "Attanasio, Orazio P and Blow, Laura and Hamilton, Robert and
+               Leicester, Andrew",
+  journal   = "Economica",
+  publisher = "Wiley",
+  volume    =  76,
+  number    =  301,
+  pages     = "20--50",
+  abstract  = "Over much of the past 25 years, house price and consumption
+               growth have been closely synchronized. Three main hypotheses for
+               this have been proposed: increases in house prices raise
+               household wealth and so their consumption; house price growth
+               reduces credit constraints by increasing the collateral available
+               to homeowners; and house prices and consumption are together
+               influenced by common factors. Using microeconomic data, we find
+               that the relationship between house prices and consumption is
+               stronger for younger than older households, contradicting the
+               wealth channel. We suggest that common causality has been the
+               most important factor linking house prices and consumption.",
+  month     =  feb,
+  year      =  2009,
+  language  = "en"
+}
+
+@ARTICLE{Bansal2004-uo,
+  title     = "Risks for the Long Run: A potential resolution of asset pricing
+               puzzles",
+  author    = "Bansal, Ravi and Yaron, Amir",
+  journal   = "J. Finance",
+  publisher = "Wiley",
+  volume    =  59,
+  number    =  4,
+  pages     = "1481--1509",
+  abstract  = "ABSTRACTWe model consumption and dividend growth rates as
+               containing (1) a small long‐run predictable component, and (2)
+               fluctuating economic uncertainty (consumption volatility). These
+               dynamics, for which we provide empirical support, in conjunction
+               with Epstein and Zin's (1989) preferences, can explain key asset
+               markets phenomena. In our economy, financial markets dislike
+               economic uncertainty and better long‐run growth prospects raise
+               equity prices. The model can justify the equity premium, the
+               risk‐free rate, and the volatility of the market return,
+               risk‐free rate, and the price–dividend ratio. As in the data,
+               dividend yields predict returns and the volatility of returns is
+               time‐varying.",
+  month     =  aug,
+  year      =  2004,
+  language  = "en"
+}
+
+@ARTICLE{Corbae2015-xj,
+  title     = "Leverage and the foreclosure crisis",
+  author    = "Corbae, Dean and Quintin, Erwan",
+  journal   = "J. Polit. Econ.",
+  publisher = "University of Chicago Press",
+  volume    =  123,
+  number    =  1,
+  pages     = "1--65",
+  abstract  = "How much of the recent rise in foreclosures can be explained by
+               the large number of high-leverage mortgage contracts originated
+               during the housing boom? We present a model where heterogeneous
+               households select from a set of mortgage contracts and choose
+               whether to default on their payments given realizations of income
+               and housing price shocks. The set of mortgage contracts consists
+               of loans with high downpayments and loans with low downpayments.
+               We run an experiment where the use of low downpayment loans is
+               initially limited by payment-to-income requirements but then
+               becomes unrestricted for 8 years. The relaxation of approval
+               standards causes homeownership rates, high-leverage originations
+               and the frequency of high interest rate loans to rise much like
+               they did in the US between 1998-2006. When home values fall by
+               the magnitude observed in the US from 2007-08, default rates
+               increase by over 180\% as they do in the data. Two distinct
+               counterfactual experiments where approval standards remain the
+               same throughout suggest that the increased availability of
+               high-leverage loans prior to the crisis can explain between 40\%
+               to 65\% of the initial rise in foreclosure rates. Furthermore, we
+               run policy experiments which suggest that recourse could have had
+               significant dampening effects during the crisis.",
+  month     =  feb,
+  year      =  2015,
+  language  = "en"
+}
+
+@ARTICLE{Di-Maggio2014-xm,
+  title     = "Monetary policy pass-through: Household consumption and voluntary
+               deleveraging",
+  author    = "Di Maggio, Marco and Kermani, Amir and Ramcharan, Rodney",
+  journal   = "SSRN Electron. J.",
+  publisher = "Elsevier BV",
+  abstract  = "Do households bene…t from expansionary monetary policy? We
+               investigate how indebted households'consumption and saving
+               decisions are aected by anticipated changes in monthly interest
+               payments. We focus on borrowers with adjustable rate mortgages
+               originated between 2005 and 2007 featuring an automatic reset of
+               the interest rate after …ve years. The monthly payment due from
+               the average borrower falls by 52 percent ($900) upon reset,
+               resulting in an increase in disposable income totaling tens of
+               thousands of dollars over the remaining life of the mortgage. We
+               uncover three patterns. First, the average household increases
+               monthly car purchases by 40 percent ($150) upon reset. Second,
+               this expansionary eect is attenuated by the borrowers'voluntary
+               deleveraging, as a signi…cant fraction of the increased income is
+               deployed to accelerate debt repayment. Third, the marginal
+               propensity to consume is signi…cantly higher for low income and
+               underwater borrowers. To complement these household-level
+               …ndings, we employ county-level data to provide evidence that
+               consumption responded more to a reduction in short-term interest
+               rates in counties with a larger fraction of adjustable rate
+               mortgage debt. Our results shed light on the income channel of
+               monetary policy as well as the role of debt rigidity in reducing
+               the eectiveness of monetary policy.",
+  year      =  2014,
+  language  = "en"
+}
+
+@INPROCEEDINGS{Hedlund2017-lb,
+  title     = "Monetary policy, heterogeneity, and the housing channel",
+  author    = "Hedlund, Aaron and Karahan, Fatih and Mitman, Kurt and Ozkan,
+               Serdar",
+  booktitle = "2017 Meeting Papers",
+  volume    =  1610,
+  pages     =  6,
+  abstract  = "In this section, we develop a heterogeneous agents New of the
+               housing channel in the transmission of monetary policy, we
+               include the following key ingredients: (1) a frictional housing",
+  year      =  2017,
+  language  = "en"
+}
+
+@ARTICLE{Blundell2008-qj,
+  title     = "Consumption inequality and partial insurance",
+  author    = "Blundell, Richard and Pistaferri, Luigi and Preston, Ian",
+  journal   = "Am. Econ. Rev.",
+  publisher = "American Economic Association",
+  volume    =  98,
+  number    =  5,
+  pages     = "1887--1921",
+  month     =  nov,
+  year      =  2008
+}
+
+@ARTICLE{Browning2013-wo,
+  title     = "Housing wealth and consumption: A micro panel study",
+  author    = "Browning, Martin and Gørtz, Mette and Leth-Petersen, Søren",
+  journal   = "Econ. J. (London)",
+  publisher = "Oxford University Press (OUP)",
+  volume    =  123,
+  number    =  568,
+  pages     = "401--428",
+  abstract  = "There is strong evidence that house prices and consumption are
+               synchronised. There is, however, disagreement over the causes of
+               this link. This study examines if there is a wealth effect of
+               house prices on consumption. Using a household‐level panel data
+               set with information about house ownership, income, wealth and
+               demographics for a large sample of the Danish population in the
+               period 1987–96, we model the dependence of the growth rate of
+               total household expenditure with unanticipated innovations to
+               house prices. Controlling for factors related to competing
+               explanations, we find little evidence of a housing wealth effect.",
+  month     =  may,
+  year      =  2013,
+  language  = "en"
+}
+
+@ARTICLE{Campbell2007-qe,
+  title     = "How do house prices affect consumption? Evidence from micro data",
+  author    = "Campbell, John Y and Cocco, João F",
+  journal   = "J. Monet. Econ.",
+  publisher = "Elsevier BV",
+  volume    =  54,
+  number    =  3,
+  pages     = "591--621",
+  abstract  = "Housing is a major component of wealth. Since house prices
+               fluctuate considerably over time, it is important to understand
+               how these fluctuations affect households’ consumption decisions.
+               Rising house prices may stimulate consumption by increasing
+               households’ perceived wealth, or by relaxing borrowing
+               constraints. This paper investigates the response of household
+               consumption to house prices using UK micro data. We estimate the
+               largest effect of house prices on consumption for older
+               homeowners, and the smallest effect, insignificantly different
+               from zero, for younger renters. This finding is consistent with
+               heterogeneity in the wealth effect across these groups. In
+               addition, we find that regional house prices affect regional
+               consumption growth. Predictable changes in house prices are
+               correlated with predictable changes in consumption, particularly
+               for households that are more likely to be borrowing constrained,
+               but this effect is driven by national rather than regional house
+               prices and is important for renters as well as homeowners,
+               suggesting that UK house prices are correlated with aggregate
+               financial market conditions.",
+  month     =  apr,
+  year      =  2007,
+  language  = "en"
+}
+
+@ARTICLE{Carroll2011-jc,
+  title     = "How large are housing and financial wealth effects? A new
+               approach",
+  author    = "Carroll, Christopher D and Otsuka, Misuzu and Slacalek, Jiri",
+  journal   = "J. Money Credit Bank.",
+  publisher = "Wiley",
+  volume    =  43,
+  number    =  1,
+  pages     = "55--79",
+  month     =  feb,
+  year      =  2011,
+  language  = "en"
+}
+
+@ARTICLE{Case2011-bd,
+  title     = "Wealth effects revisited 1978-2009",
+  author    = "Case, Karl E and Quigley, John M and Shiller, Robert J",
+  journal   = "SSRN Electron. J.",
+  publisher = "Elsevier BV",
+  abstract  = "We re-examine the link between changes in housing wealth,
+               financial wealth, and consumer spending. We extend a panel of
+               U.S. states observed quarterly during the seventeen-year period,
+               1982 through 1999, to the thirty-one year period, 1978 through
+               2009. Using techniques reported previously, we impute the
+               aggregate value of owner-occupied housing, the value of financial
+               assets, and measures of aggregate consumption for each of the
+               geographic units over time. We estimate regression models in
+               levels, first differences and in error-correction form, relating
+               per capita consumption to per capita income and wealth. We find a
+               statistically significant and rather large effect of housing
+               wealth upon household consumption. This effect is consistently
+               larger than the effect of stock market wealth upon consumption.
+               This reinforces the conclusions reported in our previous
+               analysis. In contrast to our previous analysis, however, we do
+               find -- based on data which include the recent volatility in
+               asset markets -- that the effects of declines in housing wealth
+               in reducing consumption are at least as large as the effects of
+               increases in housing wealth in increasing the course of household
+               consumption.",
+  year      =  2011,
+  language  = "en"
+}
+
+@ARTICLE{Challe2015-dq,
+  title     = "Precautionary saving and aggregate demand",
+  author    = "Challe, Edouard and Matheron, Julien and Ragot, Xavier and
+               Rubio-Ramirez, Juan Francisco",
+  journal   = "SSRN Electron. J.",
+  publisher = "Elsevier BV",
+  abstract  = "We formulate and estimate a tractable macroeconomic model with
+               time-varying precautionary savings. We argue that the latter
+               affect aggregate fluctuations via two main channels: a
+               stabilizing aggregate supply effect working through the supply of
+               capital; and a destabilizing aggregate demand effect generated by
+               a feedback loop between unemployment risk and consumption demand.
+               Using the estimated model to measure the contribution of
+               precautionary savings to the propagation of recent recessions, we
+               find strong aggregate demand effects during the Great Recession
+               and the 1990–1991 recession. In contrast, the supply effect at
+               least offset the demand effect during the 2001 recession.",
+  year      =  2015,
+  language  = "en"
+}
+
+@ARTICLE{Blundell2016-he,
+  title     = "Consumption inequality and family labor supply",
+  author    = "Blundell, Richard and Pistaferri, Luigi and Saporta-Eksten, Itay",
+  journal   = "Am. Econ. Rev.",
+  publisher = "American Economic Association",
+  volume    =  106,
+  number    =  2,
+  pages     = "387--435",
+  abstract  = "We examine the link between wage and consumption inequality using
+               a life-cycle model incorporating consumption and family labor
+               supply decisions. We derive analytical expressions for the
+               dynamics of consumption, hours, and earnings of two earners in
+               the presence of correlated wage shocks, nonseparability,
+               progressive taxation, and asset accumulation. The model is
+               estimated using panel data for hours, earnings, assets, and
+               consumption. We focus on family labor supply as an insurance
+               mechanism and find strong evidence of smoothing of permanent wage
+               shocks. Once family labor supply, assets, and taxes are properly
+               accounted for there is little evidence of additional insurance.
+               (JEL D12, D14, D91, J22, J31)",
+  month     =  feb,
+  year      =  2016,
+  language  = "en"
+}
+
+@ARTICLE{Calomiris2009-pt,
+  title     = "The (mythical?) housing wealth effect",
+  author    = "Calomiris, Charles W and Longhofer, Stanley D and Miles, William",
+  journal   = "SSRN Electron. J.",
+  publisher = "Elsevier BV",
+  year      =  2009
+}

models/We-Would-Like-In-Econ-ARK/HKMOHousingChannelMP/prior-literature.md

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+# Prior Literature Summary: Monetary Policy, Heterogeneity, and the Housing Channel
+
+## The papers my ballpark paper cites
+
+The HKM&O (2017) paper sits on several strands of prior work. **Housing, wealth, and consumption:** Micro evidence showed that house prices affect spending in different ways for different households—e.g. Campbell and Cocco (2007) and Case, Quigley, and Shiller (2011) found important housing-wealth or collateral effects, while Attanasio et al. (2009) and Browning et al. (2013) stressed collateral/credit and common factors rather than a pure wealth effect. That heterogeneity in who responds to house prices and why is central to a “housing channel” of policy. **Heterogeneity and monetary transmission:** Work on hand-to-mouth and “wealthy hand-to-mouth” (Kaplan, Violante, and Weidner 2014), partial consumption insurance (Blundell, Pistaferri, and Preston 2008; Kaplan and Violante 2010), and the redistribution channel of monetary policy (Auclert 2019; Di Maggio, Kermani, and Ramcharan 2014; Gornemann, Kuester, and Nakajima 2014) showed that differences in marginal propensities to consume and in exposure to interest rates and inflation are key for how monetary policy affects aggregate demand. **Housing and mortgages in general equilibrium:** Models with heterogeneous households, illiquid housing, default, and foreclosures—e.g. Jeske, Krueger, and Mitman (2013), Hedlund (2016), Corbae and Quintin (2015), and Favilukis (2010)—and “balance sheet recession” ideas (Huo and Ríos-Rull 2013) provided the tools to embed a frictional housing market and mortgage contracts in a macro model. Together, this literature gave the ingredients HKM&O use: a heterogeneous-agent framework where housing is illiquid and collateral matters, and where monetary policy works partly through the housing channel and redistribution, which their paper then formalizes in a single model of “monetary policy, heterogeneity, and the housing channel.”
+
+## Key foundational papers
+
+- **Jeske, Krueger & Mitman (2013)**: Same author (Mitman), same theme—heterogeneous-agent model with housing, mortgages, and default; direct methodological and topical precursor.
+- **Hedlund (2016)**: Same author (Hedlund)—illiquid housing, debt, and foreclosures; supplies the “frictional housing” block and cyclical housing/debt dynamics that HKM&O build on.
+- **Kaplan & Violante (2010, 2014)**: Consumption insurance and “wealthy hand-to-mouth”; establish that MPC heterogeneity is central for aggregate consumption and policy, so the housing channel matters precisely because of this heterogeneity.
+- **Blundell, Pistaferri & Preston (2008)**: BPP partial-insurance framework; empirical and conceptual base for the consumption-insurance/heterogeneity literature that Kaplan–Violante and HKM&O build on.
+- **Campbell & Cocco (2007)**: Micro evidence on how house prices affect consumption by age/tenure; canonical support for a housing channel and for heterogeneity in that response.
+- **Favilukis (2010)**: Early heterogeneous-agent GE model with housing wealth, housing finance, and limited risk-sharing; methodological precedent for putting housing in a macro model.
+- **Di Maggio, Kermani & Ramcharan (2014)**: Direct evidence on monetary policy pass-through to consumption via mortgages (e.g. ARM resets) and higher MPC for constrained borrowers; empirical counterpart to the mechanism in HKM&O.