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Housing and debt over the life cycle and over the business cycle

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  • Matteo Iacoviello
  • Marina Pavan

Abstract

This paper describes an equilibrium life-cycle model of housing where nonconvex adjustment costs lead households to adjust their housing choice infrequently and by large amounts when they do so. In the cross-sectional dimension, the model matches the wealth distribution; the age profiles of consumption, homeownership, and mortgage debt; and data on the frequency of housing adjustment. In the time-series dimension, the model accounts for the procyclicality and volatility of housing investment, and for the procyclical behavior of household debt.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Boston in its series Working Papers with number 09-12.

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Date of creation: 2009
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Handle: RePEc:fip:fedbwp:09-12

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Keywords: Housing ; Mortgage loans;

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Housing and Debt Over the Life Cycle and Over the Business Cycle
    by Christian Zimmermann in NEP-DGE blog on 2009-11-09 21:21:08
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Satyajit Chatterjee & Burcu Eyigungor, 2011. "A Quantitative Analysis of the US Housing and Mortgage Markets and the Mortgage Crisis," 2011 Meeting Papers 1109, Society for Economic Dynamics.
  2. Satyajit Chatterjee & Burcu Eyigungor, 2011. "A quantitative analysis of the U.S. housing and mortgage markets and the foreclosure crisis," Working Papers 11-26, Federal Reserve Bank of Philadelphia.
  3. Jonathan Halket, 2012. "Existence of an equilibrium in incomplete markets with discrete choices and many markets," Economics Discussion Papers 711, University of Essex, Department of Economics.
  4. Modibo Sidibé, 2012. "The Contribution of Housing to the Dynamics of Inequalities," Working Papers 1215, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  5. Patrick Bajari & Phoebe Chan & Dirk Krueger & Daniel Miller, 2010. "A Dynamic Model of Housing Demand: Estimation and Policy Implications," NBER Working Papers 15955, National Bureau of Economic Research, Inc.
  6. Wouter J. Den Haan & Vincent Sterk, 2011. "The Myth of Financial Innovation and the Great Moderation," Economic Journal, Royal Economic Society, vol. 121(553), pages 707-739, 06.
  7. Sydney Ludvigson & Stijn Van Nieuwerburgh & Jack Favilukis, 2012. "Foreign Ownership of U.S. Safe Assets: Good or Bad?," 2012 Meeting Papers 297, Society for Economic Dynamics.
  8. Fernández-Villaverde, Jesús & Krueger, Dirk, 2011. "Consumption And Saving Over The Life Cycle: How Important Are Consumer Durables?," Macroeconomic Dynamics, Cambridge University Press, vol. 15(05), pages 725-770, November.
  9. Lee E. Ohanian & Andrea Raffo, 2011. "Aggregate hours worked in OECD countries: new measurement and implications for business cycles," International Finance Discussion Papers 1039, Board of Governors of the Federal Reserve System (U.S.).
  10. Jonathan Halket & Matteo Pignatti, 2012. "Housing tenure choices with private information," Economics Discussion Papers 717, University of Essex, Department of Economics.
  11. Katya Kartashova & Ben Tomlin, 2013. "House Prices, Consumption and the Role of Non-Mortgage Debt," Working Papers 13-2, Bank of Canada.
  12. Joseph Vavra & David Berger, 2012. "Consumption Dynamics During the Great Recession," 2012 Meeting Papers 109, Society for Economic Dynamics.
  13. Wouter den Haan & Vincent Sterk, 2009. "The comovement between household loans and real activity," DNB Working Papers 204, Netherlands Central Bank, Research Department.
  14. Jaanika Meriküll, 2012. "Households borrowing during a creditless recovery," Bank of Estonia Working Papers wp2012-2, Bank of Estonia, revised 22 Feb 2012.
  15. Julia Thomas & Aubhik Khan, 2009. "Endogenous Market Segmentation and the Volatility of House Prices," 2009 Meeting Papers 1127, Society for Economic Dynamics.

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