What Caused the Decline in the US Saving Ratio?
We investigate whether the mortgage equity withdrawal (MEW) mechanism is useful for explaining the large declines in the US personal saving ratio in the last two decades. MEW depends on house price inflation and mortgage rates. In addition stock prices may affect saving ratio. Therefore, we estimate a VEC model with these four variables. The impulse response analysis shows that saving ratio decreases with positive shocks to asset prices and increases with positive shocks to mortgage rates.
|Date of creation:||05 Jan 2011|
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- Alan Greenspan & James Kennedy, 2008.
"Sources and uses of equity extracted from homes,"
Oxford Review of Economic Policy,
Oxford University Press, vol. 24(1), pages 120-144, spring.
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- Juselius, Katarina, 2006. "The Cointegrated VAR Model: Methodology and Applications," OUP Catalogue, Oxford University Press, number 9780199285679. Full references (including those not matched with items on IDEAS)
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