Economics at your fingertips  

Consumption, housing collateral and the Canadian business cycle

Ian Christensen, Paul Corrigan, Caterina Mendicino and Shin-Ichi Nishiyama

Canadian Journal of Economics, 2016, vol. 49, issue 1, 207-236

Abstract: How important are collateral constraints for reproducing salient features of the data? To address this question, we estimate two nested versions of a New Keynesian model: one with collateralized household debt and the frictionless version of the same model. Both versions of the model are fit to Canadian data using Bayesian methods. We argue that the presence of collateral constraints improves the performance of the model in terms of overall goodness of fit. Housing collateral helps to generate a positive correlation between consumption and house prices. Moreover, housing collateral induced spillovers boosted consumption growth during the housing market boom-bust cycles of the late 1980s and early 2000s.

JEL-codes: E32 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Downloads: (external link) (text/html)
access restricted to subscribers

Related works:
Journal Article: Consumption, housing collateral and the Canadian business cycle (2016) Downloads
Working Paper: Consumption, Housing Collateral, and the Canadian Business Cycle (2009) Downloads
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:

Ordering information: This journal article can be ordered from
https://www.economic ... ionen/membership.php

Access Statistics for this article

Canadian Journal of Economics is currently edited by Katherine Cuff

More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Werrner Antweiler, Treasurer UBC Sauder School of Business 2053 Main Mall Vancouver, BC, V6T 1Z2. Contact information at EDIRC.
Bibliographic data for series maintained by Prof. Werner Antweiler ().

Page updated 2023-06-15
Handle: RePEc:cje:issued:v:49:y:2016:i:1:p:207-236