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Does the rental housing market stabilize the economy? A micro and macro perspective

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Listed:
  • Michal Rubaszek

    (SGH Warsaw School of Economics)

  • Margarita Rubio

    (School of Economics, University of Nottingham)

Abstract

The size of the rental housing market in most countries around the globe is small. In this article, we claim that this may be detrimental to macroeconomic stability. We do it in three steps. First, using survey data for Poland, a country with a high homeownership ratio, we discuss microeconomic housing tenure choice determinants. Second, with a panel of 28 EU countries over the period 2004–2017, we provide evidence that the response of house prices to macroeconomic fundamentals is attenuated by the size of the private rental market. Third, we propose a DSGE model in which households satisfy housing needs both by owning and by renting. By simulating the model, we show that reforms enhancing the rental housing market contribute to macroeconomic stability. We conclude by formulating policy recommendations.

Suggested Citation

  • Michal Rubaszek & Margarita Rubio, 2020. "Does the rental housing market stabilize the economy? A micro and macro perspective," Empirical Economics, Springer, vol. 59(1), pages 233-257, July.
  • Handle: RePEc:spr:empeco:v:59:y:2020:i:1:d:10.1007_s00181-019-01638-z
    DOI: 10.1007/s00181-019-01638-z
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Does rental housing market stabilize the economy? A micro and macro perspective.
      by Christian Zimmermann in NEP-DGE blog on 2017-09-26 20:45:35

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    Cited by:

    1. Adam Czerniak & Michał Rubaszek, 2018. "The Size of the Rental Market and Housing Market Fluctuations," Open Economies Review, Springer, vol. 29(2), pages 261-281, April.

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    More about this item

    Keywords

    Rental housing market; Panel data; Survey data; DSGE models;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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