The effect of house prices on household borrowing: a new approach

James Cloyne, Kilian Huber, Ethan Ilzetzki and Henrik Kleven

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We investigate the effect of house prices on household borrowing using administrative mortgage data from the United Kingdom and a new empirical approach. The data contain household-level information on house prices and borrowing in a panel of homeowners, who refinance at regular and quasi-exogenous intervals. The data and setting allow us to develop an empirical approach that exploits house price variation coming from the idiosyncratic and exogenous timing of refinance events around the Great Recession. We present two main results. First, there is a clear and robust effect of house prices on borrowing. Second, the effect of house prices on borrowing can be explained largely by collateral effects. We study the collateral channel through a multivariate and nonparametric heterogeneity analysis of proxies for collateral and wealth effects.

JEL-codes: D14 E32 R31 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2019-06-01
New Economics Papers: this item is included in nep-ban, nep-eur, nep-mac and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (65)

Published in American Economic Review, 1, June, 2019, 109(6), pp. 2104-2136. ISSN: 0002-8282

Downloads: (external link)
http://eprints.lse.ac.uk/101065/ Open access version. (application/pdf)

Related works:
Journal Article: The Effect of House Prices on Household Borrowing: A New Approach (2019)
Working Paper: The effect of house prices on household borrowing: a new approach (2017)
Working Paper: The Effect of House Prices on Household Borrowing: A New Approach (2017)
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:ehl:lserod:101065

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().