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Housing equity, saving and debt dynamics over the Great Recession

Listed author(s):
  • William Elming

    ()

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Andreas Ermler

    (Institute for Fiscal Studies)

Registered author(s):

    This paper uses the large and heterogeneous house price shocks in Denmark from 2006-2009 to provide new evidence on the contested determinants of the correlation between house prices and saving. Crucially, to compare the savings behaviour of home-owners who experienced di fferent house price shocks but similar shocks to income expectations, we exploit the structure of the wage setting process in the Danish public sector. We fi nd strong evidence of a causal link between changes in house prices and saving for young and old home-owners, both through a direct wealth eff ect and through housing equity serving as collateral or precautionary wealth.

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    File URL: http://www.ifs.org.uk/uploads/publications/wps/wp201612.pdf
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    Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W16/12.

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    Date of creation: 02 Aug 2016
    Handle: RePEc:ifs:ifsewp:16/12
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