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House Rental Versus Purchase: Theory And Evidence

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  • Rubio Sánchez, Margarita

Abstract

The housing market structure displays remarkable differences across countries, especially in terms of the relative size and the effi ciency of the rental sector. This heterogeneity can be due to several factors, such as cultural or preference, fiscal, and the institutional. In this paper, I propose a dynamic general equilibrium model with a housing market, both owner-occupied and rented, introducing collateral constraints for borrowers, in order to capture the wealth effects of the owner-occupied housing. Within this framework, I illustrate how the monetary policy is transmitted through the housing market. Besides, I assess the implications of changes in policies related with the housing market, as well as changes in the consumer relative preferences with respect to both types of housing.

Suggested Citation

  • Rubio Sánchez, Margarita, 2012. "House Rental Versus Purchase: Theory And Evidence," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 21(2).
  • Handle: RePEc:sdo:regaec:v:21:y:2012:i:2_11
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    File URL: http://www.usc.es/econo/RGE/Vol21_2/castelan/bt3c.pdf
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    Keywords

    Housing market; Rental; Monetary policy;

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