House prices and risk sharing

Dmytro Hryshko (), Maria Luengo-Prado and Bent Sorensen

No 2010-17, Working Papers from Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales

Abstract: Homeowners in the Panel Study of Income Dynamics are able to maintain a high level of consumption following job loss (or disability) in periods of rising local house prices while the consumption drop for homeowners who lose their job in times of lower house prices is substantial. These results are consistent with homeowners being able to access wealth gains when housing appreciates as witnessed by their ability to smooth consumption more than renters. A calibrated model of endogenous homeownership and consumption is able to reproduce the patterns in the data quite well and provides an interpretation of the empirical results.

Date: 2010-08-16
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Note: This paper is included in the IMDEA Social Sciences Working Paper Series through the Institute's Visiting Researchers Programme
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Published in Journal of Monetary Economics 57(8), November 2010: 975-987

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Related works:
Journal Article: House prices and risk sharing (2010)
Working Paper: House Prices and Risk Sharing (2010)
Working Paper: House Prices and Risk Sharing (2010)
Working Paper: House prices and risk sharing (2009)
Working Paper: House Prices and Risk Sharing (2009)
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