01-06-2023 |
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Homeowners’ budgets and debt servicing capacity projections
By 2023, because of inflation and rising interest rates the monthly budget of an additional 3.4 percent of homeowners would be insufficient to obtain their current loans from a Danish credit institute. Further, in case of unemployment the budget of 3 out of 4 affected households would be severely impacted despite insurance and spousal income.
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09-02-2023 |
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Inflation – why did it rise and what are the drivers ahead?
The surge in inflation in 2021-22 reflects the covid-19 pandemic and Rus-sia’s war in Ukraine as well as the associated policy responses. In 2023-24, at least three factors are likely to drive inflation: (a) more stable energy prices, (b) an expected slowdown in aggregate demand growth caused in part by tighter monetary policy, and (c) improving supply chains.
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02-02-2023 |
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Refinancing behaviour by homeowners in Denmark when mortgage rates rise
Rising mortgage rates have led to high mortgage refinancing activity in Denmark. The Danish mortgage system has a match-funding principle, and rising rates allow fixed-rate mortgage borrowers to buy back their mortgages at a discount. 62 per cent of this discount was used to reduce debt, while 38 per cent was cashed out. When cashing out, homeowners may become more sensitive to adverse developments in interest rates and house prices.
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24-01-2023 |
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Housing wealth and consumption during Covid-19
House prices increased considerably in Denmark during the pandemic, while consumption remained moderate. The marginal propensity to consume out of changes in housing wealth was modest in the years leading up to the pandemic. The largest housing wealth gains during the pandemic occurred among household segments with relatively low marginal propensities to consume.
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22-12-2022 |
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Do banks manage their flood risk exposures? Evidence from the Danish credit registry
Some regional banks are highly exposed to flood risk. Yet, there is little evidence that banks manage these exposures. The lack of flood risk management in these banks could worsen the adverse local economic impact of a flood. Therefore, banks should incorporate flood risk in their risk management.
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16-11-2022 |
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Evaluating the macroprudential stance in a growth-at-risk framework
The ultimate objective of macroprudential policy is to contribute to financial stability by curbing the build-up of systemic risks and alleviating negative outcomes for the economy should risks materialize . Measuring and communicating whether policy goals are achieved is challenging, as financial crises are rare and risks are often only measurable in case they materialize. The memo outlines how growth-at-risk can be used to illustrate the objectives of macroprudential policy.
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10-11-2022 |
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Effects of borrower-based regulation on housing demand
Borrower-based regulation, influencing housing buyers’ access to credit, would have different effects depending on buyer’s demographics, wealth and location. By modelling housing buyers’ preferences and budget constraints, we find that any such regulation would push demand to suburban areas. Limits on debt-to-income ratios (DTI) would mainly affect buyers in the largest cities; however, we find that the restrictions would not affect net demand for small apartments in Copenhagen.
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24-10-2022 |
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Labour scarcity in Denmark: What role do foreign recruitments play?
This Economic Memo examines the role of international recruitments in the Danish labour market. It shows that while only a small share of new recruitments has tended to come from abroad, foreign labour has contributed markedly to employment growth in Denmark. Looking forward, Danish firms still appear to have the option of recruiting workers from abroad.
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30-09-2022 |
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Inequality and savings
This memo studies the impact of demographic shifts and income inequality on the evolution of savings rates in Denmark, and compares with evidence from the US. Income inequality has followed similar trends in Denmark as in the US, and savings rates vary in a similar way over the life cycle and along the income distribution in the two countries. Changes in savings behavior play an important role for the evolution of total savings.
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27-09-2022 |
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Energy renovations of houses will pay for themselves by the heating bill – not by the sales price
The majority of energy renovations of houses cost more than they increase the sales price. This holds particularly in the metropolitan area and Aarhus, but also in a number of rural areas. Renovations that increase the sales price more than the renovation costs reduce CO2 emissions only marginally and are typically only possible for houses in and around the medium to large towns and more generally in the geographically more central parts of the country. (Memo available in Danish only).
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02-09-2022 |
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(Mis)matching in the post-pandemic Danish labour market
Since the beginning of the pandemic, matching in the Danish labour market seems to have become less efficient: a given number of job seekers and vacancies result in fewer matches than previously. This economic memo studies mismatch between job seekers and vacancies as a potential explanation. Mismatch was an important driver during the great financial crisis, but much less so during the pandemic.
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08-08-2022 |
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The rise in cash holdings of Danish companies
We show that the cash holdings of a typical Danish company have increased after the 2007/08 financial crisis. Especially the cash holdings of small companies have seen a strong increase. The increase in cash holdings coincides with a decrease in the use of loan financing for the typical company, which suggests a decrease in loan demand or supply to these companies. The development of cash holdings is also driven by a strong selection effect: companies with low cash holdings have been especially likely to exit during and after the financial crisis.
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