A Life-Cycle Analysis of Social Security with Housing

Kaiji Chen ()

Review of Economic Dynamics, 2010, vol. 13, issue 3, pages 597-615

Abstract: This paper incorporates two features of housing in a life-cycle analysis of social security: housing as a durable good and housing market frictions. We find that both housing quantities and homeownership rates respond strongly to eliminating social security. Accordingly, the aggregate impacts of this policy reform are significantly larger in an economy with explicit housing choices than in a standard life-cycle economy. Our analysis shows that the key mechanism behind these results is the substitution effects of a change in interest rates and, thus, the price of housing services on the choice of non-durable consumption versus housing services. (Copyright: Elsevier)

Keywords: Durable goods; Housing market frictions; Housing tenure choice; Social security (search for similar items in EconPapers)
JEL-codes: E21 E62 H55 (search for similar items in EconPapers)
Date: 2010
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