This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Boom In, Bust Out: Young Households and the Housing Price Cycle

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Francois Ortalo-Magne (London School of Economics)
Sven Rady (Graduate School of Business, Stanford University)

Additional information is available for the following registered author(s):

Abstract

The UK experienced a major residential real estate boom-bust cycle from the mid-Eighties to the mid-Nineties, accompanied by unprecedented shifts in the owner occupancy rate of young households. Previous empirical analyses have pointed toward income changes and financial deregulation as the likely causes of this episode, with little to say about the differential effects on various age groups. We show that, in a life-cycle model with income heterogeneity and credit constraints, the observed co-movements of housing prices and owner occupancy rates can be explained as an equilibrium response to income and credit market shocks. Our findings suggest that the financial liberalisation of the early Eighties was crucial for the unparalleled increase in the owner occupancy rate of young households during the boom.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://129.3.20.41/eps/fin/papers/9810/9810004.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by EconWPA in its series Finance with number 9810004.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 10 pages
Date of creation: 22 Oct 1998
Date of revision: 25 Oct 1998
Handle: RePEc:wpa:wuwpfi:9810004

Note: Type of Document - Acrobat PDF; prepared on PC; pages: 10 ; figures: included. Prepared for Session B1, "Theories of Money, Credit and Aggregate Economic Activity" (organized by Nobuhiro Kiyotaki, London School of Economics), at the 13th Annual Congress of the European Economic Association, Berlin, September 1998.
Contact details of provider:
Web page: http://129.3.20.41

For technical questions regarding this item, or to correct its listing, contact: (EconWPA).

Related research
Keywords: Housing Demand Income Fluctuations Overlapping Generations Collateral Constraint

Other versions of this item:

Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
R21 - Urban, Rural, and Regional Economics - - Household Analysis - - - Housing Demand

This paper has been announced in the following NEP Reports:

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
  1. Balazs Egert & Dubravko Mihaljek, 2007. "Determinants of House Prices in Central and Eastern Europe," William Davidson Institute Working Papers Series wp894, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  2. Salá Rios, Mercè, 2004. "Análisis territorial de la accesibilidad a la vivienda en España," Estudios de Economía Aplicada, Revista Estudios de Economía Aplicada, vol. 22, pages 1-21, Diciembre. [Downloadable!] (restricted)
  3. Antonia Diaz & Maria J. Luengo-Prado, 2006. "On The User Cost And Homeownership," Economics Working Papers we065421, Universidad Carlos III, Departamento de Economía. [Downloadable!]
    Other versions:
  4. Francois Ortalo-Magne & Sven Rady, 2001. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  5. Andrew Benito, . "How does the down-payment constraint affect the UK housing market?," Bank of England working papers 294, Bank of England. [Downloadable!]
  6. Catarina Figueira & John Glen & Joseph Nellis, 2005. "A Dynamic Analysis of Mortgage Arrears in the UK Housing Market," Urban/Regional 0509006, EconWPA. [Downloadable!]
  7. Laura Berger-Thomson & Luci Ellis, 2004. "Housing Construction Cycles and Interest Rates," RBA Research Discussion Papers rdp2004-08, Reserve Bank of Australia. [Downloadable!]
  8. Dag Einar Sommervoll, 2007. "Counterintuitive response to tax incentives? Mortgage interest deductions and the demand for debt," Discussion Papers 492, Research Department of Statistics Norway. [Downloadable!]
  9. Rady, Sven & Ortalo-Magné, François, 2002. "Homeownership," Discussion Papers in Economics 28, University of Munich, Department of Economics. [Downloadable!]
    Other versions:
  10. Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005. "Assessing High House Prices: Bubbles, Fundamentals, and Misperceptions," NBER Working Papers 11643, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Matteo Iacoviello & Raoul Minetti, 2002. "The Credit Channel of Monetary Policy: Evidence from the Housing Market," Boston College Working Papers in Economics 541, Boston College Department of Economics, revised 29 Aug 2003. [Downloadable!]
    Other versions:
  12. Christophe Blot, 2006. "Peut-on parler de bulle sur le marché immobilier au Luxembourg ?," BCL working papers cahier_etude_20, Central Bank of Luxembourg. [Downloadable!]
  13. Maria Concetta Chiuri & Tullio Jappelli, 2006. "Do the elderly reduce housing equity? An international comparison," CSEF Working Papers 158, Centre for Studies in Economics and Finance (CSEF), University of Salerno, Italy. [Downloadable!]
  14. Fracois Ortalo-Magne & Sven Rady, 2000. "Why are Housing Prices so Volatile? Income Shocks in a Stochastic Heterogeneous-Agents Model," Econometric Society World Congress 2000 Contributed Papers 1352, Econometric Society. [Downloadable!]
  15. Charles Ka Yui Leung & Dandan Feng, 2004. "Testing Alternative Theories of Property Price-Trading Volume with Commercial Real Estate Market Data," Discussion Papers 00003, Chinese University of Hong Kong, Department of Economics. [Downloadable!]
    Other versions:
  16. Ortalo-Magné, François & Rady, Sven, 2005. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints (Revised Version)," Discussion Papers in Economics 494, University of Munich, Department of Economics. [Downloadable!]
  17. J. Swank & J. Kakes & A.F. Tieman, 2002. "The Housing Ladder, Taxation, and Borrowing constraints," WO Research Memoranda (discontinued) 688, Netherlands Central Bank, Research Department. [Downloadable!]
    Other versions:
Statistics
Access and download statistics

Did you know? To receive notification of recent additions to the database, subscribe to the free NEP reports.

This page was last updated on 2008-8-8.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.