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Housing demand shocks and households’ balance sheets

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  • Marc Anderes

    (ETH Zurich)

Abstract

We examine the dynamic effects of housing demand shocks on a large set of macroeconomic series and detailed household balance sheet components for different wealth groups. The results show that a positive housing demand shock translates into a large boom in economic activity and reveal notable heterogeneity among wealth groups. While households of all wealth groups make heavy use of home equity-based borrowing, we find a larger consumer spending sensitivity for poorer households. A historical decomposition suggests that housing demand shocks have largely contributed to the pronounced drop in poorer households’ consumption during and after the Great Recession.

Suggested Citation

  • Marc Anderes, 2023. "Housing demand shocks and households’ balance sheets," Empirical Economics, Springer, vol. 65(6), pages 2711-2749, December.
    • Handle: RePEc:spr:empeco:v:65:y:2023:i:6:d:10.1007_s00181-023-02435-5
    DOI: 10.1007/s00181-023-02435-5
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    More about this item

    Keywords

    Housing demand shocks; Household balance sheets; Bayesian dynamic factor model;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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