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House prices and risk sharing

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Author Info

  • Hryshko, Dmytro
  • José Luengo-Prado, María
  • Sørensen, Bent E.

Abstract

Homeowners in the Panel Study of Income Dynamics are able to maintain a high level of consumption following job loss (or disability) in periods of rising local house prices while the consumption drop for homeowners who lose their job in times of lower house prices is substantial. These results are consistent with homeowners being able to access wealth gains when housing appreciates as witnessed by their ability to smooth consumption more than renters. A calibrated model of endogenous homeownership and consumption is able to reproduce the patterns in the data quite well and provides an interpretation of the empirical results.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 57 (2010)
Issue (Month): 8 (November)
Pages: 975-987

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Handle: RePEc:eee:moneco:v:57:y:2010:i:8:p:975-987

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Web page: http://www.elsevier.com/locate/inca/505566

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Houses are a poor way to share risk
    by Economic Logician in Economic Logic on 2009-11-02 15:26:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Michael Amior & Jonathan Halket, 2011. "Do Households Use Homeownership To Insure Themselves? Evidence across US Cities," 2011 Meeting Papers 276, Society for Economic Dynamics.
  2. Dimitrios Christelis & Dimitris Georgarakos & Tullio Jappelli, 2011. "Wealth Shocks, Unemployment Shocks and Consumption in the Wake of the Great Recession," CSEF Working Papers 279, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 19 Oct 2011.
  3. Andrew Paciorek & Todd M. Sinai, 2010. "Does Home Owning Smooth the Variability of Future Housing Consumption?," NBER Working Papers 16531, National Bureau of Economic Research, Inc.
  4. Punzi, Maria Teresa, 2012. "Housing market and current account imbalances in the international economy," Research Discussion Papers 1/2012, Bank of Finland.
  5. Almudena Sevilla Sanz & Annalisa Cristini, 2011. "Do House Prices Affect Consumption? A Comparison Exercise," Economics Series Working Papers 589, University of Oxford, Department of Economics.
  6. Rodolfo G. Campos & Iliana Reggio, 2013. "Measurement error in imputation procedures," Banco de Espa�a Working Papers 1322, Banco de Espa�a.
  7. Cristini, Annalisa & Sevilla, Almudena, 2013. "Do House Prices Affect Consumption? A Re-assessment of the Wealth Hypothesis," IZA Discussion Papers 7576, Institute for the Study of Labor (IZA).
  8. Daniel Cooper & María José Luengo-Prado, 2011. "House price growth when kids are teenagers: a path to higher intergenerational achievement?," Working Papers 11-6, Federal Reserve Bank of Boston.
  9. Partridge, Mark D. & Rickman, Dan S. & Olfert, M. Rose & Ali, Kamar, 2012. "Dwindling U.S. internal migration: Evidence of spatial equilibrium or structural shifts in local labor markets?," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 375-388.

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