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User costs of housing when households face a credit constraint: evidence for Germany


  • Dümmler, Tobias
  • Kienle, Stephan


We develop a formula for user costs of housing on the basis of a neoclassical approach to housing investment which does not impose a perfect capital market assumption. We suggest that the definition for the user costs of housing should be extended by an additional term which mirrors the credit constraints a household would be faced with. This extension term consists of the inflation gap between consumer and house price inflation multiplied with an average loan-to-value ratio and the real house prices. The empirical relevance of our finding is confirmed by a VECM. A time series for the user costs of housing is calculated using this extended definition.

Suggested Citation

  • Dümmler, Tobias & Kienle, Stephan, 2010. "User costs of housing when households face a credit constraint: evidence for Germany," Discussion Paper Series 1: Economic Studies 2010,12, Deutsche Bundesbank.
  • Handle: RePEc:zbw:bubdp1:201012

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    Housing investments; user costs of housing; cointegration;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity


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