EconPapers    
Economics at your fingertips  
 

Household Borrowing Constraints and Residential Investment Dynamics

Hashmat Khan () and Jean-François Rouillard ()

No 16-07, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: Why does residential investment lead output in the US and Canada but it is coincident in other industrialized countries? In this paper we explore the role of home-equity loans used to boost consumption as a channel that affects residential investment. Towards this end, we consider a multi-agent real business cycle model augmented with household borrowing constraints that re flect home-equity loans or refinancing constraints. The main contribution of our paper is to highlight that the severity of these borrowing constraints in the economy can generate both stylized facts of residential investment dynamics. In US and Canada, a greater proportion of households rely on home-equity loans relative to other industrialized countries. This difference matters for the distinct residential investment dynamics observed across countries.

Keywords: Home-Equity Loans; Borrowing Constraints; Residential Investment; Business Cycles (search for similar items in EconPapers)
JEL-codes: E22 E32 R21 R31 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2016-05-30
New Economics Papers: this item is included in nep-dge, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Published: Carleton Economic Papers

Downloads: (external link)
http://www.carleton.ca/economics/wp-content/uploads/cep16-07.pdf

Related works:
Journal Article: Household borrowing constraints and residential investment dynamics (2018) Downloads
Working Paper: Household Borrowing Constraints and Residential Investment Dynamics (2017) 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: https://EconPapers.repec.org/RePEc:car:carecp:16-07

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Carleton Economic Papers from Carleton University, Department of Economics C870 Loeb Building, 1125 Colonel By Drive, Ottawa Ontario, K1S 5B6 Canada.
Bibliographic data for series maintained by Sabrina Robineau ( this e-mail address is bad, please contact ).

 
Page updated 2023-01-31
Handle: RePEc:car:carecp:16-07