Housing demand shocks and households’ balance sheets

Marc Anderes ()
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Marc Anderes: ETH Zurich

Empirical Economics, 2023, vol. 65, issue 6, No 7, 2749 pages

Abstract: Abstract We examine the dynamic effects of housing demand shocks on a large set of macroeconomic series and detailed household balance sheet components for different wealth groups. The results show that a positive housing demand shock translates into a large boom in economic activity and reveal notable heterogeneity among wealth groups. While households of all wealth groups make heavy use of home equity-based borrowing, we find a larger consumer spending sensitivity for poorer households. A historical decomposition suggests that housing demand shocks have largely contributed to the pronounced drop in poorer households’ consumption during and after the Great Recession.

Keywords: Housing demand shocks; Household balance sheets; Bayesian dynamic factor model (search for similar items in EconPapers)
JEL-codes: D31 E21 E32 E44 R31 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s00181-023-02435-5

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