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House Prices and Risk Sharing

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  • Hryshko, Dmytro

    ()
    (University of Alberta, Department of Economics)

  • Luengo-Prado, Maria

    ()
    (Northeastern University)

  • Sorensen, Bent

    ()
    (University of Houston)

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

Paper provided by University of Alberta, Department of Economics in its series Working Papers with number 2010-16.

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Length: 52 pages
Date of creation: 01 Sep 2010
Date of revision:
Handle: RePEc:ris:albaec:2010_016

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Keywords: job displacement; disability; housing collateral;

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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
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Cited by:
  1. Jonathan Halket & Michael Amior, 2012. "Do Households Use Homeownership To Insure Themselves? Evidence Across U.S. Cities," Economics Discussion Papers, University of Essex, Department of Economics 718, University of Essex, Department of Economics.
  2. 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).
  3. Paciorek, Andrew & Sinai, Todd, 2012. "Does home owning smooth the variability of future housing consumption?," Journal of Urban Economics, Elsevier, vol. 71(2), pages 244-257.
  4. 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.
  5. 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, Elsevier, vol. 42(1-2), pages 375-388.
  6. Maria Teresa Punzi, 2013. "Housing Market and Current Account Imbalances in the International Economy," Review of International Economics, Wiley Blackwell, vol. 21(4), pages 601-613, 09.
  7. Campos, Rodolfo G. & Reggio, Iliana, 2014. "Measurement error in imputation procedures," Economics Letters, Elsevier, Elsevier, vol. 122(2), pages 197-202.
  8. Daniel Cooper & María José Luengo-Prado, 2011. "House price growth when kids are teenagers: a path to higher intergenerational achievement?," Working Papers, Federal Reserve Bank of Boston 11-6, Federal Reserve Bank of Boston.
  9. Christelis, Dimitris & Georgarakos, Dimitris & Jappelli, Tullio, 2011. "Wealth shocks, unemployment shocks and consumption in the wake of the Great Recession," CFS Working Paper Series 2011/27, Center for Financial Studies (CFS).

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  1. Economic Logic blog

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