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Housing Tenure, Consumption and Household Debt: Life-Cycle Dynamics During a Housing Bust in Spain

Author

Listed:
  • Clodomiro Ferreira

    (Banco de España)

  • Julio Gálvez

    (CUNEF Universidad/SHOF)

  • Myroslav Pidkuyko

    (Banco de España)

Abstract

The housing bust in Spain was characterized by a significant and rapid drop in home ownership among the younger cohorts, a relatively homogeneous but significant decrease in consumption, and significant movements in the rent-to-house price ratio. To uncover the causes of these movements, we solve and estimate an equilibrium life-cycle model with non-linear income dynamics, mortgages, housing, and rental markets and simulate a series of counterfactual policy changes and macroeconomic conditions observed in Spain during the period. The lion’s share of the observed drop in home ownership and consumption and the housing market dynamics can be explained by the tightening of credit conditions and the major shift in income dynamics observed in Spain between the boom and bust phases.

Suggested Citation

  • Clodomiro Ferreira & Julio Gálvez & Myroslav Pidkuyko, 2023. "Housing Tenure, Consumption and Household Debt: Life-Cycle Dynamics During a Housing Bust in Spain," Working Papers 285, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:285
    as

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    File URL: https://rednie.eco.unc.edu.ar/files/DT/285.pdf
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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