Does the rental housing market stabilize the economy? A micro and macro perspective

Michał Rubaszek and Margarita Rubio

Empirical Economics, 2020, vol. 59, issue 1, No 8, 233-257

Abstract: Abstract The size of the rental housing market in most countries around the globe is small. In this article, we claim that this may be detrimental to macroeconomic stability. We do it in three steps. First, using survey data for Poland, a country with a high homeownership ratio, we discuss microeconomic housing tenure choice determinants. Second, with a panel of 28 EU countries over the period 2004–2017, we provide evidence that the response of house prices to macroeconomic fundamentals is attenuated by the size of the private rental market. Third, we propose a DSGE model in which households satisfy housing needs both by owning and by renting. By simulating the model, we show that reforms enhancing the rental housing market contribute to macroeconomic stability. We conclude by formulating policy recommendations.

Keywords: Rental housing market; Panel data; Survey data; DSGE models (search for similar items in EconPapers)
JEL-codes: C83 D91 E47 R21 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s00181-019-01638-z

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