Marta Cota
Hi! I am a Ph.D. candidate at the Center for Economic Research and Graduate Education—Economics Institute (CERGE EI).
My research interests lie between Macroeconomics and Household Finance. I develop structural models that encompass individual expectation heterogeneity (explored in my first paper) and heterogeneity in search frictions (the focus of my Job Market Paper).
My supervisors are Marek Kapička (chair) and Ctirad Slavík.
I will be on the Job Market in 2023-2024. My CV is linked here.
I am doing a short talk on my JMP at the virtual seminar PhD Economics Virtual Seminar on October 12th, 2023 (EVS link )
Working papers:
Financial Skills and Search in the Mortgage Market (joint work with Ante Sterc)
Abstract: The growing accessibility of mortgages in the U.S. exposes households to mortgage repayments, impacting their financial flexibility. This study examines the roles of individual financial skills and search effort in mortgage take-up and refinancing, with implications for consumption disparities across skill levels. Utilizing Bayesian Record Linkage, we construct a unique U.S. data set encompassing mortgage details and borrowers' attributes, including an objective financial literacy measure. We find that low-skilled borrowers search less and lock in at higher rates, facing potential losses over $10,000 over the mortgage term. Moreover, our data estimates show that skill-based losses persist over the mortgage duration, predicting 12-16 p.p. higher mortgage delinquency and up to 30% lower likelihood of refinancing. Subsequently, we formulate a micro-founded mortgage search framework to assess consumption inequalities across the skill distribution. The steady-state consumption growth hinges on anticipated mortgage rate fluctuations and potential delinquency occurrences. Our model estimates show that search intensity and financial skills contribute to 55% and 10% of mortgage rate variation, respectively. Motivated by the digital advancements in mortgage lending in the U.S., we quantify the impact of financial education and increased mortgage accessibility on consumption differences across different skill levels. Accessible mortgages curtail search costs, leading to more low-skilled homeowners with higher delinquency risk. Financial education mitigates the adverse effects of increased accessibility, emerging as an effective policy aligned with mortgage lending advancements. Lastly, we show that low-rate environment accommodates skilled homeowners, and reinforces refinancing activity, deepening consumption differences across different skill levels.
Extrapolative Expectations and Retirement Savings - SSRN link, R&R at The Review of Finance
Abstract: This paper uses a structural life-cycle model based on household expectations data to explain workers' retirement contribution patterns. The Michigan Survey of Consumers data shows that households extrapolate from their recent income history and overstate the persistence and volatility of their future income. I show that pessimists prefer to save in liquid accounts that they can tap into at any time. This mechanism underlies the difference in retirement contributions between rational and extrapolative workers. The life-cycle model incorporates retirement contribution incentives, including employer rate matches and tax deferrals. Even though these incentives sustain stable rates over the rational worker's life, extrapolative workers delay their contributions initially and gradually increase them over the work life, matching the contribution rates data. The policy test reveals that mandating automatic enrollment does not increase saving rates among extrapolative workers. A gradual increase in default rates matches how workers contribute and may increase total savings.
! Personal news
I have just started a project on network effects in individual mortgage performance under the supervision of Mauro Mastrogiacomo and Maarten van Rooij at the Dutch National Bank. Both grateful and excited!