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How can the risk from the mismatch between inflation rates in mortgage and labor markets be mitigated?

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  • Martin Grandes
  • Damia?n Galinsky

Abstract

This paper proposes a financial instrument to mitigate the risk of a mismatch between inflation and wage variations that would affect the repayment of inflation-indexed mortgages in relatively high inflation economies, where housing finance is at an incipient phase of its development. In particular, using the Argentine experience in 2016-2017, and the empirical evidence of the two preceding decades, three swap/insurance options are proposed and simulated that would allow the debtors to limit their exposure to inflation.

Suggested Citation

  • Martin Grandes & Damia?n Galinsky, 2017. "How can the risk from the mismatch between inflation rates in mortgage and labor markets be mitigated?," Revista Ecos de Economía, Universidad EAFIT, vol. 21(45), pages 40-68.
    • Handle: RePEc:col:000442:016192
    DOI: 10.17230/ecos.2017.45.3
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    References listed on IDEAS

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    1. Mauricio Cardenas & Alejandro Badel, 2003. "La crisis de financiamiento hipotecario en Colombia: Causas y consecuencias," Research Department Publications 4355, Inter-American Development Bank, Research Department.
    2. Loic Chiquier & Michael Lea, 2009. "Housing Finance Policy in Emerging Markets," World Bank Publications - Books, The World Bank Group, number 2641, April.
    3. Mauricio Cárdenas & Alejandro Badel F., 2003. "La crisis de financiamiento hipotecario en Colombia: causas y consecuencias," Coyuntura Económica, Fedesarrollo.
    4. Jazmin Carballo-Huerta & Juan Pedro Gonzalez-Ibarra, 2009. "Financial innovations and developments in housing finance in Mexico," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Proceedings of the IFC Conference on "Measuring financial innovation and its impact", Basel, 26-27 August 2008, volume 31, pages 7-34, Bank for International Settlements.
    5. Mauricio Cárdenas & Alejandro Badel F., 2003. "La crisis de financiamiento hipotecario en Colombia: causas y consecuencias," Coyuntura Económica, Fedesarrollo, September.
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    More about this item

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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