Housing tenure, consumption and household debt: life-cycle dynamics during a housing bust in Spain

Clodomiro Ferreira, Julio Gálvez and Myroslav Pidkuyko
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Clodomiro Ferreira: Banco de España
Julio Gálvez: Banco de España

No 2424, Working Papers from Banco de España

Abstract: The housing bust in Spain was characterised by a significant and rapid drop in home ownership among the younger cohorts, a relatively homogeneous but significant decrease in consumption and significant movements in the rent-to-house price ratio. To uncover the causes of these movements, we solve and estimate an equilibrium life-cycle model with non-linear income, mortgage and housing and rental market dynamics, and simulate a series of counterfactual policy changes and macroeconomic conditions observed in Spain during the period. The lion’s share of the observed drop in home ownership and consumption and the housing market dynamics can be explained by the tightening of credit conditions and the major shift in income dynamics observed in Spain between the boom and bust phases.

Keywords: life-cycle models; mortgage debt; housing (search for similar items in EconPapers)
JEL-codes: E21 E44 (search for similar items in EconPapers)
Pages: 71 pages
Date: 2024-07
New Economics Papers: this item is included in nep-dge
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https://www.bde.es/f/webbe/SES/Secciones/Publicaci ... 24/Files/dt2424e.pdf First version, July 2024 (application/pdf)

Related works:
Working Paper: Housing Tenure, Consumption and Household Debt: Life-Cycle Dynamics During a Housing Bust in Spain (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2424

DOI: 10.53479/37293

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