Marginal Propensity to Consume and the Housing Choice

Maiko Koga and Kohei Matsumura
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Kohei Matsumura: Bank of Japan

No 20-E-3, Bank of Japan Working Paper Series from Bank of Japan

Abstract: We study the MPC heterogeneity of households in Japan both theoretically and empirically. We build a heterogeneous-agent overlapping-generations general equilibrium model with an illiquid and indivisible housing asset. We show that mortgage debtor exhibits high MPC and households about to upgrade their house exhibit low MPC. Using Japanese household survey data, we empirically support our theoretical predictions.

Keywords: Consumption; Heterogeneity; Housing choices; Liquidity constraints; Marginal propensity to consume (search for similar items in EconPapers)
JEL-codes: D15 E21 E50 R21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-mac and nep-ure
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Citations: View citations in EconPapers (4)

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