Download or read book Essays in Household Finance and Macroeconomics written by Franco Zeccchetto and published by . This book was released on 2017 with total page 248 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the first chapter, we analyze the removal of the credit-risk guarantees provided by the Government Sponsored Enterprises (GSEs) in a model with agents heterogeneous in income and house price risk. We find that wealth inequality increases, driven by higher mortgage spreads and housing rents. Housing holdings become more concentrated. Foreclosures fall. The removal benefits high-income households while hurting low and mid-income households (renters and highly leveraged mortgagors with conforming loans). GSE reform requires compensating transfers, sufficiently high elasticity of rental supply, or linking GSE reform with the elimination of the mortgage interest deduction.