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Modelling the Demand for Housing over the Lifecycle

Author

Listed:
  • Orazio Attanasio

    (University College London)

  • Renata Bottazzi

    (University of Bologna)

  • Hamish Low

    (University of Cambridge)

  • Lars Nesheim

    (University College London)

  • Matthew Wakefield

    (University of Bologna)

Abstract

This paper models individual demand for housing over the life-cycle, and shows the implications of this behaviour for aggregate demand. Individuals delay purchasing their first home when incomes are low or uncertain. This delay is exacerbated by downpayment constraints. Higher house prices lead households to downsize, rather than to stop being home-owners. In aggregate, positive house price shocks lead to consumption booms among the old and a fall in aggregate demand for housing, whereas positive income shocks lead to consumption booms among the young and a rise in aggregate demand for housing. (Copyright: Elsevier)

Suggested Citation

  • Orazio Attanasio & Renata Bottazzi & Hamish Low & Lars Nesheim & Matthew Wakefield, 2012. "Modelling the Demand for Housing over the Lifecycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(1), pages 1-18, January.
  • Handle: RePEc:red:issued:10-53
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Housing; Uncertainty; Credit constraints;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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