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Getting a Helping Hand: Parental Transfers and First-Time Homebuyers

Author

Listed:
  • Maurice J. Roche

    () (Economics Department, National University of Ireland, Maynooth)

  • David Duffy

    () (Economic and Social Research Institute, Dublin, Ireland.)

Abstract

A model that allows for inter vivos intergenerational transfers in a booming housing market is developed. The model is used to explain how transfers effect the first-time homebuyer’s consumption and housing decisions by alleviating borrowing constraints. The general implications of the model are tested using data from the leading Irish mortgage provider. We find that private transfers are targeted towards homebuyers that are liquidity constrained.

Suggested Citation

  • Maurice J. Roche & David Duffy, 2007. "Getting a Helping Hand: Parental Transfers and First-Time Homebuyers," Economics, Finance and Accounting Department Working Paper Series n1740507, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
  • Handle: RePEc:may:mayecw:n1740507
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    File URL: http://repec.maynoothuniversity.ie/mayecw-files/N1740507.pdf
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    References listed on IDEAS

    as
    1. McCoy, Daniel & Duffy, David & Bergin, Adele & Cullen, Joseph, 2004. "Quarterly Economic Commentary, Summer 2004," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC20042.
    2. Cox, Donald & Jappelli, Tullio, 1990. "Credit Rationing and Private Transfers: Evidence from Survey Data," The Review of Economics and Statistics, MIT Press, pages 445-454.
    3. Guiso, Luigi & Jappelli, Tullio, 2002. "Private Transfers, Borrowing Constraints and the Timing of Homeownership," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(2), pages 315-339, May.
    4. Donald Cox & Oded Stark, 2007. "On the Demand for Grandchildren: Tied Transfers and the Demonstration Effect," Chapters,in: Handbook on the Economics of Happiness, chapter 18 Edward Elgar Publishing.
    5. Olsen, Edgar O, 1969. "A Competitive Theory of the Housing Market," American Economic Review, American Economic Association, pages 612-622.
    6. Donald Cox & Oded Stark, 2007. "On the Demand for Grandchildren: Tied Transfers and the Demonstration Effect," Chapters,in: Handbook on the Economics of Happiness, chapter 18 Edward Elgar Publishing.
    7. Cox, Donald & Rank, Mark R, 1992. "Inter-vivos Transfers and Intergenerational Exchange," The Review of Economics and Statistics, MIT Press, pages 305-314.
    8. Ermisch, John, 2004. "Parent and adult-child interactions: empirical evidence from Britain," ISER Working Paper Series 2004-02, Institute for Social and Economic Research.
    9. Donald Cox, 1990. "Intergenerational Transfers and Liquidity Constraints," The Quarterly Journal of Economics, Oxford University Press, vol. 105(1), pages 187-217.
    10. Duffy, David & FitzGerald, John & Kennedy, Kieran A. & Smyth, Diarmaid, 2000. "Quarterly Economic Commentary, March 2000," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC20001.
    11. Engelhardt Gary V., 1994. "House Prices and the Decision to Save for Down Payments," Journal of Urban Economics, Elsevier, vol. 36(2), pages 209-237, September.
    12. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-546, June.
    13. Guiso, Luigi & Jappelli, Tullio, 1991. "Intergenerational transfers and capital market imperfections : Evidence from a cross-section of Italian households," European Economic Review, Elsevier, vol. 35(1), pages 103-120, January.
    14. Duffy, David & FitzGerald, John, 2012. "The Irish Housing Market," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).
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    Cited by:

    1. Norifumi Yukutake & Shinichiro Iwata & Takako Idee, 2011. "Strategic Interaction between Inter Vivos Gifts and Housing Acquisition," Global COE Hi-Stat Discussion Paper Series gd11-201, Institute of Economic Research, Hitotsubashi University.

    More about this item

    Keywords

    Transfers; Housing; Borrowing Constraint;

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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