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Accounting For Life-Cycle Wealth Accumulation: The Role Of Housing Institution

Author

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  • Cho, Sang-Wook (Stanley)

Abstract

This paper constructs a quantitative general equilibrium life-cycle model with uninsurable labor income to account for the differences in wealth accumulation and homeownership between Korea and the United States. The model incorporates different structures in the housing market in the two countries, namely, the mortgage market and the rental arrangements. The results from the calibrated model quantitatively explain some empirical findings in the aggregate and life-cycle profiles of wealth and homeownership. Quantitative policy experiments show that the mortgage market alone can account for more than 40% of the differences in the aggregate homeownership ratios. When coupled with the rental arrangements, both institutions can account for approximately 52% of the differences in the cross-country homeownership ratios.

Suggested Citation

  • Cho, Sang-Wook (Stanley), 2012. "Accounting For Life-Cycle Wealth Accumulation: The Role Of Housing Institution," Macroeconomic Dynamics, Cambridge University Press, vol. 16(4), pages 493-517, September.
    • Handle: RePEc:cup:macdyn:v:16:y:2012:i:04:p:493-517_00
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    Cited by:

    1. Kim, Kyung-Hwan & You, Seung Dong, 2021. "The Global Financial Crisis and transition out of homeownership in Korea," Journal of Housing Economics, Elsevier, vol. 54(C).
    2. Lei Shao & Jie Zhang, 2024. "Retirement wealth, earnings risks, and intergenerational links," Economic Inquiry, Western Economic Association International, vol. 62(4), pages 1494-1519, October.
    3. De Nardi, Mariacristina & Yang, Fang, 2014. "Bequests and heterogeneity in retirement wealth," European Economic Review, Elsevier, vol. 72(C), pages 182-196.
    4. Leo Kaas & Georgi Kocharkov & Edgar Preugschat & Nawid Siassi, 2021. "Low Homeownership in Germany—a Quantitative Exploration," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 128-164.

    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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