Title page
Contents
Abstract 2
1. Introduction 3
2. Conceptual Framework 9
3. Background on UK Mortgage Market 11
4. Data and Empirical Approach 13
4.1. Data 13
4.2. Empirical Specification 16
5. Results 19
5.1. Main Results 19
5.2. Robustness Checks 22
5.3. Event Study Design 23
5.4. Extensions and Policy Implications 24
5.4.1. Would the UK have experienced a Great Recession "Baby Bust" without Mortgage Interest Rate Pass-through? 24
5.4.2. Mortgage Contract Flexibility and Monetary Policy Transmission to Birth Rates 26
5.4.3. Comparing UK and US Birth Rates over the Great Recession 27
6. Conclusion 29
References 30
Appendix (for online publication) 49
Table 1. Simulated Payment Changes for families with an Adjustable Rate 42
Table 2. Summary Statistics by Quarter and Age 43
Table 3. Summary Statistics 44
Table 4. Monetary Policy and Birth Rates 45
Table 5. Heterogeneity Analysis 46
Table 6. Robustness Checks 47
Table 7. Effect of Unemployment Rates and House Prices on Birth Rates 48
Figure 1. Trends in Birth Rates and Monetary Policy in the UK and US 34
Figure 2. The Path of Interest Rates 35
Figure 3. Data and Empirical Strategy Timeline 36
Figure 4. Exposure Rates as of July 2008 37
Figure 5. Event Study 38
Figure 6. Counterfactual Simulation of Birth Rates with and without Monetary Policy 39
Figure 7. Counterfactual Simulation of Birth Rates by Share of Mortgages that are ARMs 40
Figure 8. Trends in Birth Rates and Monetary Policy in the UK and US by Age-Group 41
Table A1. Coefficients on Control Variables 52
Table A2. Microdata Evidence on Car Spending 55
Table A3. Mortgage Characteristics Across Samples 56
Table A4. Detailed Mortgage Characteristics Across Samples 57