The Impact of Housing Decisons on Business Cycles
AbstractThis paper examines the role of housing decisions on business cycles fluctuations. We use an overlapping generation model where to acquire a house whose services are an argument in the utility function households have to save for a down payment and make a long term financial committment. Because of the indivisibility of housing, households buy "too much" housing and not always able to smooth consumptiom in face of adverse business cycle fluctuations. Consumers who are still in the early stage of paying off their houses have to decrease their consumption of other goods because of their committment to repay their debts on the house
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Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2005 with number 372.
Date of creation: 11 Nov 2005
Date of revision:
Business Cycles; Housing; Consumption; Real Business Cycles.;
Find related papers by JEL classification:
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
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