Template-Type: ReDIF-Paper 1.0
Title: Hybrid Contracting in Repeated Interactions
Author-Name: Farzad Saidi
Author-Email: saidi@uni-bonn.de
Author-Name: Ulf Nielsson
Author-Name: Jesper Rangvid
Author-Name: Fabian Seyrich
Author-Name: Daniel Streitz
Classification-JEL: D12, E21, E43, E52, E63, G51, H31
Keywords: marginal propensity to consume, monetary policy, fiscal policy, mortgages


Abstract: What stimulus payments replicate the consumption effect of a desired (but potentially
infeasible) interest rate cut? Using granular full‐population administrative data, we estimate
consumption responses to interest rate changes via adjustable‐rate mortgage resets and
lump‐sum cash windfalls from unanticipated inheritances. Combining them, we map a 1
percentage point monetary‐policy rate decrease to equivalent uniform transfers of ~$1,000
per person paid over 5 years, totaling 1.3% of GDP. This estimate remains robust when
accounting for heterogeneity in the cross‐sectional incidence of these macro‐equivalent
policies. We find only modest heterogeneity in marginal propensities to consume, limiƟng
efficiency gains from targeting transfers.
  
Note: 
Length: 69
Creation-Date: 2025-08
Revision-Date:
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp699
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2025_699