Michael Boutros

Publications

1. Monetary Policy Implementation in a Negative Rate Environment [PDF] with Jonathan Witmer. Journal of Money, Credit, & Banking, 52 (2-3), March-April 2020, p. 441-470. [abstract]
   To analyze monetary policy implementation in a negative rate environment, we add the option to exchange central bank reserves for cash to the standard workhorse model of monetary policy implementation (Poole 1968). Importantly, we show that monetary policy can be constrained when the target overnight rate is below the yield on cash. At this point, the overnight rate equals the yield on cash instead of the target rate. Modifications to the implementation framework, such as a reserve requirement that varies with cash withdrawals, can help restore the implementation of monetary policy such that the overnight rate equals the target rate.
2. Borrow Now, Pay Even Later: A Quantitative Analysis of Student Debt Payment Plans [PDF] with Nuno Clara and Francisco Gomes. Journal of Financial Economics, 159, September 2024. [abstract]
   In the U.S., student debt is currently the second largest component of consumer debt. Households are required to repay these loans early in their lifecycle, when marginal utility is particularly high. We study alternative contracts that offer partial or full payment deferral until later in life. We calibrate an economy with the current contracts, and then solve for counterfactual equilibria. The alternative contracts yield large welfare gains, which are robust to assumptions about the behavior of the lenders and borrower preferences. The gains are similar to those that could come from the debt relief program currently being considered in the U.S., but without its adverse fiscal implications.
3. The Persistence of Miscalibration [PDF] with Itzhak Ben-David, John R. Graham, Campbell R. Harvey, and John Payne. Review of Financial Studies, September 2025. [abstract]
   We analyze a panel of over 28,400 S&P 500 return forecasts by CFOs to examine whether the extent of CFOs' miscalibration—providing forecast confidence intervals that are too narrow—decreases over time. We find no improvement with task repetition nor evidence of learning, that is, no improvement in response to past performance. Across CFOs, miscalibration appears to be a persistent personal trait. We find some evidence that the degree of miscalibration is related to birth cohort and stock market familiarity.
4. Windfall Income Shocks with Finite Planning Horizons [PDF] Journal of Financial Economics, 176, February 2026. [abstract]
   I study how the cognitive demands of financial planning shape household decisionmaking with respect to consumption out of windfall income shocks. I build a quantitative model of bounded rationality in which reoptimization is costly. Households respond to windfall income shocks by choosing a finite planning horizon over which to reoptimize, and the optimal planning horizon is increasing in wealth and the magnitude of the income shock. Calibrated to U.S. data, the model's distribution of consumption responses is consistent with three key facts: even highly liquid households have large consumption responses out of income shocks, the fraction of households with positive consumption responses increases with shock size, and conditional on responding, larger shocks generate smaller consumption responses.

Working Papers

5. Natural Disasters, Property Insurance, and Housing Markets with Nuno Clara and Pierre Mabille. June 2026. [abstract]
   We study how local climate risk affects the entire housing market of a country and household finances through moving and property insurance channels. We develop a dynamic spatial equilibrium housing model in which households choose location, tenure, and property insurance coverage across regions with heterogeneous exposure to climate risk. Spatial mobility and insurance decisions interact to shape house prices and population distributions across regions, and hence exposure to climate risk. The model generates realistic patterns of insurance demand, including under-insurance and strong heterogeneity across wealth, age, and regions. Using counterfactual experiments, we find that higher local climate risk induces selective migration out of exposed regions, leading to lower house prices as higher climate risk and insurance costs are capitalized into home values. Our results underscore the joint importance of endogenous spatial sorting and property insurance choices to evaluate the housing market impacts of climate change.
6. Evaluating Credit Card Minimum Payment Restrictions with Jason Allen and Benedict Guttman-Kenney. March 2026. Bank of Canada Staff Working Paper 2024-26. [abstract]
   We evaluate a hard paternalistic policy that increased credit card minimum payments in Quebec to 5 percent of the balance without changing them in the rest of Canada. We estimate the causal effects of restricting repayment choices by applying a synthetic difference-in-differences methodology to comprehensive Canadian consumer credit reporting data. In the long run, the policy increases minimum payments by 75 percent and reduces revolving debt by 26 percent. The policy persistently reduces access to credit and increases delinquencies but not defaults. Overall, consumer welfare improves unless the cost of lost credit access exceeds $16 to $54 per Quebec consumer.
7. The Macroeconomic Implications of Coholding with Andrej Mijakovic. September 2025. Bank of Canada Staff Working Paper 2024-16. [abstract]
   In the U.S., over 25% of households are coholders who simultaneously borrow on credit cards and hold cash. This generates rich marginal distributions of gross positions that underpin the distribution of net wealth often used to calibrate macroeconomic models. We show that, beyond constructing net wealth, gross positions of liquid assets and debt are important determinants of how households consume, save, and deleverage in response to income shocks. We build a model that generates aggregate distributions and household behavior in line with the data, and use it to study the implications of coholding for fiscal and monetary policy.
8. The Value of Mortgage Choice: Payment Structure and Contract Length with Nuno Clara and Katya Kartashova. June 2025. Bank of Canada Staff Working Paper 2026-2. [abstract]
   We study how households choose between three mortgage contracts with different payment structures: fixed-rate fixed-payment, variable-rate variable-payment, and a hybrid variable-rate fixed-payment mortgage where interest rate changes affect principal repayment rather than payment size. This hybrid contract, which is offered in only a few countries around the world, gives households additional flexibility to insure against payment risk while exposing them to the risk of larger future mortgage balances. We model these mortgage types simultaneously and decompose the welfare from offering each contract into aggregate risk, idiosyncratic risk, and lifecycle factors. Our calibrated model matches mortgage choice patterns in Canada, where all these options are offered with short terms. Restricting contract choice generates substantial welfare losses, but the effect of extending contract length depends on payment structure. A long-term variable-rate fixed-payment mortgage nearly replicates the welfare of the Canadian contract menu by stabilizing payments, while shifting interest-rate exposure into slower principal repayment and higher leverage.
9. Backfiring in Bad Times: When Rent Control Keeps Rent Too High with Geneviève Vallée. April 2024. [abstract]
   Rent control, intended to benefit renters by capping rent increases, may disincentivize landlords from lowering rents during temporary negative demand shocks because they are unable to quickly increase rent afterward. To test this prediction, I use a unique combination of exogenous variation in rent control policy in Toronto and a negative demand shock induced by the COVID-19 pandemic. In line with theory, rent per square foot decreased by 1.7% for rent controlled units and 4.7% for exempt units. Using a model of differentiated demand, I construct a counterfactual exercise and estimate that in the absence of rent control, rent would have decreased by 8.3% for rent-controlled units and 8.1% for exempt units.
10. Targeted vs. Timely Fiscal Stimulus Payments. August 2024. [abstract]
    This paper analyzes the tradeoff between targeted versus timely fiscal stimulus payments in a quantitative two-sector HANK model. In response to a negative sectoral shock, fiscal policy is specified as the total size of transfers, the degree of targeting towards households in the affected sector, and the number of periods until the policy can be implemented. The key trade-off in the model is that the degree of targeting is increasing in the delay until policy can be implemented. In the baseline calibration of symmetric equilibrium with one household wholly employed in each sector, the key result is that fully targeting the stimulus program to the household in the affected sector yields less total welfare than intermediate levels of targeting.
11. Evaluating the Impact of Economic Impact Payments. December 2020. [abstract]
    As part of the CARES Act, the IRS distributed $300 billion in Economic Impact Payments (EIPs) directly to US households. In the Census Bureau's Household Pulse Survey, almost 75% of households receiving an EIP reported using it to mostly pay for expenses. Separating respondents based on labor income interruptions, 84% of unemployed households reported mostly spending their EIPs, compared to 63% of employed households, suggesting that the benefits of more targeted direct transfers may have been limited, especially at the expense of timeliness. Overall, I conclude that Economic Impact Payments played an important role in stabilizing aggregate spending.

Works in Progress

12. Don't Lend So Close to Me: Payday Lending Spillover Effects on Formal Credit with Sheisha Kulkarni, Nuno Paixão, Barry Scholnick.

Discussions

1. Fiscal Stimulus, Inter- and Intratemporal Consumption Spending: Evidence from a 5 Billion Euro Experiment. Gregor Pfeifer, Davud Rostam-Afschar, Tim Ruberg, and Lukas Treber. Workshop on Household Responses to Direct Stimulus Payments and Other Shocks. August 2022.
2. Automation and Inequality in Wealth Management. Michael Reher, Stanislav Sokolinski. 3rd CEAR-RSI Household Finance Workshop. November 2022.
3. Investor Memory and Biased Beliefs: Evidence from the Field. Zhengyang Jiang, Hongqi Liu, Cameron Peng, and Hongjun Yan. 2023 European Winter Finance Conference. January 2023.
4. How and Why do Operating Firms Participate in Swap Market? Ayla Kayhan and Michael Rand. 2023 Southern Finance Association Annual Meeting. March 2023.
5. Economic Policy Uncertainty and Institutional Portfolio Investment. Andi Li. 2023 Southern Finance Association Annual Meeting. March 2023.
6. Income-Driven Repayment Plans for Student Loans. Nadia Karamcheva, Jeffrey Perry, and Constantine Yannelis. 2023 Midwestern Finance Association Conference. March 2023.
7. Salient Attributes and Household Demand for Security Designs. Petra Vokata. 2023 Northern Finance Association Annual Meeting. September 2023.
8. Risky College Savings, College Attendance, and Student Debt. Alexey Vasilenko. 2023 Financial Management Association Annual Conference. October 2023.
9. Identifying Housing Preferences in Regulated Markets: Evidence From Waiting Lists. Hans Koster, Jos van Ommeren, and Zhiling Wang. 2023 Urban Economics Association North American Meeting. October 2023.
10. Unemployment Insurance and Macro-Financial (In)stability. Yavuz Arslan, Ahmet Degerli, Bulent Guler, Gazi Kabas, and Burhan Kuruscu. 2023 Canadian Macroeconomics Study Group. November 2023.
11. Skills, Education and Wealth Inequality: the Financial Investments Channel. Elisa Castagno, Raffaele Corvino, and Francesco Ruggiero. 4th CEAR-RSI Household Finance Workshop. November 2023.
12. Stimulus through Insurance: the Marginal Propensity to Repay Debt. Gizem Kosar, Davide Melcangi, Laura Pilossoph, and David Wiczer. 2024 Vienna Global Macro Workshop. March 2024.
13. Insurance versus Moral Hazard in Income-Contingent Student Loan Repayment. Tim de Silva. 2024 SFS Cavalcade. May 2024.
14. Heterogeneity in MPC Beyond Liquidity Constraints: The Role of Permanent Earnings. Jeanne Commault. 2nd Arne Ryde Workshop: Micro Data Meet Macro Models. August 2024.
15. Exploring Climate Risk, Risk Retention, and CMBS: Understanding their Interplay. Yildiray Yildirim, and Bing Zhu. 2024 ICBFS. September 2024.
16. Student Loans and Labor Supply Incentives. Gustavo Manso, Alejandro Rivera, Hui Wang, and Han Xia. 2024 Colorado Finance Summit. December 2024.
17. The Financial Consequences of Wanting to Own a Home. Caitlin Gorback and Gregor Schubert. Online Spatial & Urban Seminar (Panelist). March 2025.
18. Student Loan Forgiveness. Michael Dinerstein, Dmitri Koustas, Constantine Yannelis, and Samuel Earnest. 2025 BFI Education Finance Conference. May 2025.
19. Green Mortgages. Joao F. Cocco, Bernardo Mendes, and S. Lakshmi Naaraayanan. 2025 FIRS. May 2025.
20. Rent Guarantee Insurance. Boaz Abramson and Stijn Van Nieuwerburgh. 2025 Western Finance Association Conference. June 2025.
21. Mortgage Rates and Rents: Evidence from Local Mortgage Lock-In Effects. Jorge De la Roca, Marco Giacoletti, and Lizhong Liu. 2025 Miami University Finance and Real Estate “Oktoberfest” Conference. September 2025.
22. From Stability to Risk: The Changing Impact of Natural Amenities on Mortgages. Aslihan Gizem Korkmaz, Lingxiao Li, and Erdem Ucar. 2025 Southern Finance Association. November 2025.
23. Of House and Home-Related Goods: The Home Purchase Channel of Expenditure. Giovanni Favara, James Graham, and Geng Li. Inaugural Rocky Mountain Urban and Real Estate (RMURE) Conference. June 2026.
24. The Design of Retirement Plan Match Schedules. Guillermo Carranza, Taha Choukhmane, Fiona Greig, Cormac O'Dea, and Lawrence Schmidt. 2026 Western Finance Association Conference. June 2026.
25. Anticipatory Spending: Pre-Payment MPCs and Consumer Types. Scott R. Baker, Michael Gelman, Lorenz Kueng, and Seung Hyeong Lee. 2026 NBER Summer Institute, Household Finance. July 2026 (Scheduled).