Re-examining the Decline in the US Saving Rate: The Impact of Mortgage Equity Withdrawal

Guglielmo Maria Caporale, Mauro Costantini and Antonio Paradiso ()

No 3897, CESifo Working Paper Series from CESifo

Abstract: In this paper we examine the role of mortgage equity withdrawal in explaining the decline of the US saving rate, since when house prices rise and mortgage rates are low, homeowners have an incentive to withdraw housing equity and this may affect the saving rate. We estimate a Vector Error Correction (VEC) model including the saving rate, asset prices, equity withdrawal and interest rates and find that indeed mortgage equity withdrawal is a key determinant of the observed saving pattern.

Keywords: saving rate; mortgage equity withdrawal; asset prices; mortgage rates; Vector Error Correction; impulse response analysis (search for similar items in EconPapers)
JEL-codes: C32 E21 O51 (search for similar items in EconPapers)
Date: 2012
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Related works:
Journal Article: Re-examining the decline in the US saving rate: The impact of mortgage equity withdrawal (2013)
Working Paper: Re-examining the Decline in the US Saving Rate: The Impact of Mortgage Equity Withdrawal (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3897

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