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Marginal Propensity to Consume and the Housing Choice

Author

Listed:
  • Maiko Koga

    (School of Economics, Senshu University)

  • Kohei Matsumura

    (Bank of Japan)

Abstract

We study the MPC heterogeneity of households in Japan both theoretically and empirically. We build a heterogeneous-agent overlapping-generations general equilibrium model with an illiquid and indivisible housing asset. We show that mortgage debtor exhibits high MPC and households about to upgrade their house exhibit low MPC. Using Japanese household survey data, we empirically support our theoretical predictions.

Suggested Citation

  • Maiko Koga & Kohei Matsumura, "undated". "Marginal Propensity to Consume and the Housing Choice," Bank of Japan Working Paper Series 20-E-3, Bank of Japan.
  • Handle: RePEc:boj:bojwps:wp20e03
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    File URL: https://www.boj.or.jp/en/research/wps_rev/wps_2020/data/wp20e03.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Consumption; Heterogeneity; Housing choices; Liquidity constraints; Marginal propensity to consume;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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