User costs of housing when households face a credit constraint: evidence for Germany

Tobias Dümmler and Stephan Kienle

No 2010,12, Discussion Paper Series 1: Economic Studies from Deutsche Bundesbank

Abstract: We develop a formula for user costs of housing on the basis of a neoclassical approach to housing investment which does not impose a perfect capital market assumption. We suggest that the definition for the user costs of housing should be extended by an additional term which mirrors the credit constraints a household would be faced with. This extension term consists of the inflation gap between consumer and house price inflation multiplied with an average loan-to-value ratio and the real house prices. The empirical relevance of our finding is confirmed by a VECM. A time series for the user costs of housing is calculated using this extended definition.

Keywords: Housing investments; user costs of housing; cointegration (search for similar items in EconPapers)
JEL-codes: C32 E13 E22 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdp1:201012

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