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Collateral constraints and rental markets

Author

Listed:
  • Hippolyte d'Albis

    () (PSE - Paris School of Economics)

  • Eleni Iliopulos

    () (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics)

Abstract

We study a benchmark model with collateral constraints and heterogeneous discounting. Contrarily to a rich literature on borrowing limits, we allow for rental markets. By incorporating this missing market, we show that impatient agents choose to rent rather than to own the collateral in the neighborhood of the deterministic steady state. Consequently, impatient agents are not indebted and borrowing constraints play no role in local dynamics.

Suggested Citation

  • Hippolyte d'Albis & Eleni Iliopulos, 2013. "Collateral constraints and rental markets," PSE - Labex "OSE-Ouvrir la Science Economique" hal-00964867, HAL.
    • Handle: RePEc:hal:pseose:hal-00964867
    DOI: 10.1016/j.econlet.2013.09.013
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00964867
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    References listed on IDEAS

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    1. Alessandro Calza & Tommaso Monacelli & Livio Stracca, 2013. "Housing Finance And Monetary Policy," Journal of the European Economic Association, European Economic Association, vol. 11, pages 101-122, January.
    2. Matteo Iacoviello, 2005. "House Prices, Borrowing Constraints, and Monetary Policy in the Business Cycle," American Economic Review, American Economic Association, vol. 95(3), pages 739-764, June.
    3. Kiyotaki, Nobuhiro & Moore, John, 1997. "Credit Cycles," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 211-248, April.
    4. Luo, Yulei & Young, Eric R., 2009. "The Wealth Distribution And The Demand For Status," Macroeconomic Dynamics, Cambridge University Press, vol. 13(S1), pages 1-30, May.
    5. Iacoviello, Matteo & Pavan, Marina, 2013. "Housing and debt over the life cycle and over the business cycle," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 221-238.
    6. Matteo Iacoviello, 2011. "Housing wealth and consumption," International Finance Discussion Papers 1027, Board of Governors of the Federal Reserve System (U.S.), revised 2011.
    7. Zou, Heng-fu, 1994. "'The spirit of capitalism' and long-run growth," European Journal of Political Economy, Elsevier, vol. 10(2), pages 279-293, July.
    8. Becker, Robert A. & Foias, Ciprian, 1987. "A characterization of Ramsey equilibrium," Journal of Economic Theory, Elsevier, vol. 41(1), pages 173-184, February.
    9. Robert A. Becker, 1980. "On the Long-Run Steady State in a Simple Dynamic Model of Equilibrium with Heterogeneous Households," The Quarterly Journal of Economics, Oxford University Press, vol. 95(2), pages 375-382.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Collateral constraints and rental markets
      by Christian Zimmermann in NEP-DGE blog on 2015-09-16 23:35:57

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    Cited by:

    1. Hirsch, Patrick, 2019. "Heterogeneous rental markets in a DSGE model of the euro area," Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203633, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    credit market; heterogeneous discounting; collateral constraints; rental market; credit market.;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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