Page 95 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.72, # 1, 2015, pp. 95-102

HOW U.S. GOVERNMENT EXPANSIONARY MONETARY POLICY

HELPS TO LOWER THE INTEREST RATES OF MORTGAGES

Ali Yashar Abbasov

master, MBA in Finance at Park University

Program maneger in MBA Program, MBA Department,

Azerbaijan State University of Economics (UNEC)

Abstract

The purpose of this project is to find out if expansionary monetary policy of the

United States of America decreasing interest rates benefits households to purchase

houses. The study will determine the effect of interest rates on housing market sales

while holding constant the effects of the unemployment rates, GDP, and Vacancy

Rate. This paper uses time-series analysis to determine the effects of US monetary

policy on households.

Key words: monetary policy, interest rates, benefits households, unemployment

rates, housing market.

JEL Classification Codes: E44; G21

BACKGROUND

In the biggest recession since the Great Depression the American dream of

owning a home was the single most prominent threat to the American household.

Failure of the mortgage giants like Fannie Mae and Freddie Mac to stop the spread

of mortgage-backed securities and their eventual demise ensured a grueling

foreclosure process for many American families in the past four years.

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