Much of the literature on the effect of housing wealth on consumption has been embedded in a simple life-cycle model in … which housing price changes work as a "wealth effect". In such models, windfall gains in housing always lead to positive … changes in consumption. However, this might constitute a fallacy of composition. Such models ignore that changes in housing …

Much of the literature on the effect of housing wealth on consumption has been embedded in a simple life-cycle model in … which housing price changes work as a "wealth effect". In such models, windfall gains in housing always lead to positive … changes in consumption. However, this might be a fallacy of composition. Such models ignore that changes in housing wealth …

This paper examines the welfare cost of rare housing disasters characterized by large drops in house prices. I … construct an overlapping generations general equilibrium model with recursive preferences and housing disaster shocks. The … likelihood and magnitude of housing disasters are inferred from historic housing market experiences in the OECD. The model shows …

the United States, housing collateral effects on consumption are absent. Given credit conditions, rising house prices … mostly explained by movements in incomes, housing supply, mortgage interest rates and credit conditions, suggesting that the …

during the Great Recession was much larger in zip codes that experienced a sharp decline in housing net worth. In the years … conclusion is that housing and household debt should play a larger role in models exploring the importance of household …

What are the effects of a housing bubble on the rest of the economy? We show that if firms and banks face collateral … constraints, a housing bubble initially raises credit demand by housing firms while leaving credit supply unaffected. It therefore … crowds out credit to non-housing firms. If time passes and the bubble lasts, however, housing firms eventually pay back their …