EconPapers    
Economics at your fingertips  
 

Household Borrowing Constraints and Residential Investment Dynamics

Hashmat Khan () and Jean-François Rouillard

Cahiers de recherche from Departement d'économique de l'École de gestion à l'Université de Sherbrooke

Abstract: It is well-known that residential investment leads output in the US economy. The main contribution of our paper is to highlight the role of household borrowing constraints in accounting for this fact. We study the role of home-equity loans used to boost consumption as a channel that affects residential investment. We consider a multi-agent model where some home-owning households face borrowing constraints that re ect home-equity loans or refinancing constraints. We show that the severity of the households' borrowing constraints in an economy can generate this stylized fact of US residential investment dynamics. Interestingly, the model correctly predicts coincident residential investment dynamics in countries with less severe borrowing constraints. This prediction is borne out when the model is calibrated to French data.

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: 29 pages
Date: 2016-08, Revised 2017-11
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:

Downloads: (external link)
http://gredi.recherche.usherbrooke.ca/wpapers/GREDI-1604.pdf (application/pdf)

Related works:
Journal Article: Household borrowing constraints and residential investment dynamics (2018) Downloads
Working Paper: Household Borrowing Constraints and Residential Investment Dynamics (2016) 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:shr:wpaper:16-04

Access Statistics for this paper

More papers in Cahiers de recherche from Departement d'économique de l'École de gestion à l'Université de Sherbrooke Contact information at EDIRC.
Bibliographic data for series maintained by Jean-François Rouillard ().

 
Page updated 2025-03-20
Handle: RePEc:shr:wpaper:16-04