Houses as ATMs? Mortgage Refinancing and Macroeconomic Uncertainty
Michael Michaux and
Hui Chen ()
Additional contact information
Michael Michaux: USC Marshall
No 1369, 2011 Meeting Papers from Society for Economic Dynamics
This paper constructs a theory of land market activity in settings where there is uncertainty and private information about the security of land tenure. Land sellers match with buyers in a competitive search environment, and an illiquid land market emerges as a screening mechanism. As a consequence, adverse selection and an insecure system of property rights stifle land market transactions. As a useful application of the model, I analyze the relationships between the characteristics of the land market and labour flows between agricultural and off-farm employment. Empirical analysis using household level data from Indonesia provides credence to the proposed mechanism. Difference-in-difference estimation and probit analysis show that formally titled land is actively traded, while untitled land is less liquid. This is consistent with the theory given that possession of a legal land certificate improves ownership security, and ac- cess to a land registry reduces the asymmetry of information. Additional implications of the theory are verified empirically by studying the differences between markets for unregistered land across Indonesian provinces.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Working Paper: Houses as ATMs? Mortgage Refinancing and Macroeconomic Uncertainty (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:1369
Access Statistics for this paper
More papers in 2011 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().