House Prices and Risk Sharing

Sørensen, Bent E, Maria Luengo-Prado and Dmytro Hryshko ()
Authors registered in the RePEc Author Service: Bent E. Sorensen

No 7894, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using data from the Panel Study of Income Dynamics, we show that homeowners 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. The 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. We calibrate and simulate a model of endogenous homeownership and consumption which is able to reproduce the patterns in the data quite well.

Keywords: Consumption smoothing; Psid; Regional house prices (search for similar items in EconPapers)
JEL-codes: D12 E21 (search for similar items in EconPapers)
Date: 2010-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

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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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