EconPapers    
Economics at your fingertips  
 

Mandatory pension savings, private savings, homeownership, and financial stability

Asgeir Danielsson

Economics from Department of Economics, Central bank of Iceland

Abstract: This paper contributes to the discussion of effects of mandatory pension savings and house price risk on aggregate household savings, homeownership, and risks in lending to homeowners. The analysis is theoretical and based on the life-cycle hypothesis. It is shown that mandatory pension savings based on defined benefits will increase risk in lending to homeowners. Households that remain homeowners will increase their personal savings while those that prefer renting will decrease their savings as renters take on less risk from house price volatility than homeowners. The relative size of the two effects on savings depends on households‘ preferences over homeownership and renting. The assets of the mandatory pension funds in Iceland are among the highest in the world. This country also scores very high in homeownership with around 80% of households living in own homes. For these reasons data on the Icelandic pension system and on homeownership in this country provide a convenient background for discussion of the theoretical issues.

Date: 2012-05
New Economics Papers: this item is included in nep-age, nep-ban, nep-dge and nep-ure
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://sedlabanki.is/lisalib/getfile.aspx?itemid=9685 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 File not found (http://sedlabanki.is/lisalib/getfile.aspx?itemid=9685 [301 Moved Permanently]--> https://sedlabanki.is/lisalib/getfile.aspx?itemid=9685)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ice:wpaper:wp58

Access Statistics for this paper

More papers in Economics from Department of Economics, Central bank of Iceland Contact information at EDIRC.
Bibliographic data for series maintained by Central Bank of Iceland ( this e-mail address is bad, please contact ).

 
Page updated 2025-03-30
Handle: RePEc:ice:wpaper:wp58