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Mortgage Market Development, Savings, and Growth

Author

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  • Xiaowei Li

Abstract

Jappelli and Pagano (1994) argues that tightening the borrowing constraints in the mortgage markets promotes savings. Employing a six-period overlapping generations model with endogenous growth and a method of simulation calibrated on the Middle East, this paper demonstrates that the above argument is tenable only if consumers do not alter their tenure choices. Consumers do, however, postpone or forsake the purchase of a house under severely restrictive borrowing constraints, causing the savings and growth rates to fall. Therefore, for countries with scarce mortgage availability like those in the Middle East, expanding the mortgage markets to some extent is conducive to savings and growth.

Suggested Citation

  • Xiaowei Li, 2001. "Mortgage Market Development, Savings, and Growth," IMF Working Papers 2001/036, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2001/036
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    Cited by:

    1. Doling, John & Vandenberg, Paul & Tolentino, Jade, 2013. "Housing and Housing Finance—A Review of the Links to Economic Development and Poverty Reduction," ADB Economics Working Paper Series 362, Asian Development Bank.
    2. International Monetary Fund, 2007. "Turkey: Selected Issues," IMF Staff Country Reports 2007/364, International Monetary Fund.
    3. (No last name available), Himanshu, 2013. "Poverty and Food Security in India," ADB Economics Working Paper Series 369, Asian Development Bank.
    4. Debuque-Gonzales, Margarita, 2013. "Empirical Determinants and Patterns of Research and Development Investment in Asia," ADB Economics Working Paper Series 364, Asian Development Bank.
    5. Erbas, S. Nuri & Nothaft, Frank E., 2005. "Mortgage markets in Middle East and North African countries: Market development, poverty reduction, and growth," Journal of Housing Economics, Elsevier, vol. 14(3), pages 212-241, September.

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