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Consumption over the Life Cycle: How Different is Housing?

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  • Fang Yang

    (SUNY Albany)

Abstract

Micro data over the life cycle show different patterns for consumption for housing and non-housing goods: The consumption profile of non-housing goods is hump-shaped, while the consumption profile for housing first increases monotonically and then flattens out. These patterns hold true at each consumption quartile. This paper develops a quantitative, dynamic, general equilibrium model of life-cycle behavior, that generates consumption profiles consistent with the observed data. Borrowing constraints are essential in explaining the accumulation of housing assets early in life, while transaction costs are crucial in generating the slow downsizing of the housing assets later in life. (Copyright: Elsevier)

Suggested Citation

  • Fang Yang, 2009. "Consumption over the Life Cycle: How Different is Housing?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(3), pages 423-443, July.
    • Handle: RePEc:red:issued:06-210
    DOI: 10.1016/j.red.2008.06.002
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    More about this item

    Keywords

    Consumption; Housing; Life cycle; Distribution;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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