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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

    (Banco de España)

  • Myroslav Pidkuyko

    (Banco de España)

Abstract

The housing bust in Spain was characterised 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, mortgage and housing and rental market dynamics, 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, 2024. "Housing tenure, consumption and household debt: life-cycle dynamics during a housing bust in Spain," Working Papers 2424, Banco de España.
    • Handle: RePEc:bde:wpaper:2424
    DOI: https://doi.org/10.53479/37293
    as

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    References listed on IDEAS

    as
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    4. Gonzalo Paz-Pardo, 2024. "Homeownership and Portfolio Choice over the Generations," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(1), pages 207-237, January.
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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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