What Did Homeowners Do with Home Equity Borrowing? Contemporaneous and Long‐Term Effects

Sheng Guo

Journal of Money, Credit and Banking, 2022, vol. 54, issue 8, 2445-2475

Abstract: Using a panel sample from the Panel Study Income Dynamics (1999–2015), I find that homeowners' contemporaneous spending and nonhome wealth increased with home equity withdrawals, but their longer term spending and wealth declined if their home equity was extracted during the housing boom period. Following Hurst and Stafford's (2004) definition of liquidity constraint, I find that the constrained homeowners' contemporaneous spending increased less, while their financial wealth increased more than those of the unconstrained. Unconstrained homeowners invested more than constrained homeowners in nonhome real estate and businesses. In the long run, the consumption spending of both groups persistently declined, while their wealth recovered from initial declines.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/jmcb.12907

Related works:
Working Paper: What Did Homeowners Do with Home Equity Borrowing? Contemporaneous and Long-term Effects (2021)
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: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:54:y:2022:i:8:p:2445-2475

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley Content Delivery ().