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Housing Markets, Wealth and the Business Cycle

Author

Listed:
  • Pietro Catte
  • Nathalie Girouard
  • Robert W. R. Price
  • Christophe André

Abstract

The paper examines the linkages between housing markets and the business cycle in OECD countries, focusing on how differences in the degree of resilience to economic shocks can be affected by the structural characteristics of housing and mortgage markets. The paper focuses specifically on: the transmission channel from housing wealth to consumption and on the factors behind house price variability, which help to determine whether the housing sector plays a stabilising role or not. Estimates of the marginal propensity to consume out of housing wealth are presented for ten OECD countries, where it is found that the strongest impact on consumption is in countries that have large, efficient and responsive mortgage markets. Particularly important in this regard is the degree of mortgage market “completeness” -- i.e. the extent to which the market is able to offer a variety of products and to serve a broad range of potential borrowers -- in particular, the extent to which they provide ... Cette étude examine les liens entre les marchés immobiliers et le cycle économique dans les pays de l’OCDE, se concentrant sur le rôle des spécificités nationales des marchés immobiliers et hypothécaires sur l’inégale résilience face aux chocs économiques. Cette étude s’intéresse particulièrement au canal de transmission de la richesse immobilière à la consommation et aux facteurs expliquant la variabilité des prix des logements ; ces deux aspects contribuent à déterminer si le secteur immobilier joue un rôle stabilisateur ou non. Des estimations de la propension marginale à consommer la richesse immobilière sont présentées pour dix pays de l’OCDE. Ces estimations indiquent que les effets les plus important sur la consummation apparaissent dans les pays ayant des marchés hypothécaires de grande taille, efficients et réactifs. Le niveau de « complétude » du marché hypothécaire -- la mesure dans laquelle le marché peut offrir une variété de produits et répondre à un large éventail ...

Suggested Citation

  • Pietro Catte & Nathalie Girouard & Robert W. R. Price & Christophe André, 2004. "Housing Markets, Wealth and the Business Cycle," OECD Economics Department Working Papers 394, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:394-en
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    File URL: http://dx.doi.org/10.1787/534328100627
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    More about this item

    Keywords

    business cycles; consommation; consumption; cycle économique; house prices; marchés hypothécaires; mortgage markets; prix des logements; richesse; wealth;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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