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Housing consumption and macroprudential policies in Europe: An ex ante evaluation

Author

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  • Mavropoulos, Antonios
  • Xiong, Qizhou

Abstract

In this paper, we use the panel of the first two waves of the Household Finance and Consumption Survey by the European Central Bank to study housing demand of European households and evaluate potential housing market regulations in the post-crisis era. We provide a comprehensive account of the housing decisions of European households between 2010 and 2014, and structurally estimate the housing preference of a simple life-cycle housing choice model. We then evaluate the effect of a tighter LTV/LTI regulation via counter-factual simulations. We find that those regulations limit homeownership and wealth accumulation, reduces housing consumption but may be welfare improving for the young households.

Suggested Citation

  • Mavropoulos, Antonios & Xiong, Qizhou, 2018. "Housing consumption and macroprudential policies in Europe: An ex ante evaluation," IWH Discussion Papers 17/2018, Halle Institute for Economic Research (IWH).
  • Handle: RePEc:zbw:iwhdps:172018
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    References listed on IDEAS

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    Cited by:

    1. Maria Chiara Cavalleri & Boris Cournède & Volker Ziemann, 2019. "Housing markets and macroeconomic risks," OECD Economics Department Working Papers 1555, OECD Publishing.

    More about this item

    Keywords

    housing consumption; macroprudential policies; LTV/LTI regulation;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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