The Wealth Distribution with Durable Goods

By Antonia Díaz, M. Luengo-Prado. 2010

135 citations recorded by the source corpus.

In the United States, the distribution of houses is less egalitarian than that of earnings for the total population, but these two distributions are remarkably similar for homeowners. Additionally, housing as a fraction of total wealth decreases with the level of wealth. In order to understand the different factors that account for these wealth composition patterns, we introduce illiquid houses and collateral credit in a general equilibrium model of heterogeneous agents with idiosyncratic uncertainty. A combination of very persistent shocks to earnings, frictions in the housing market, and a rental market is necessary to obtain numbers in line with the evidence.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/47f894b16cfcd11d03468a61806e487f543ae7c7

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Citations in the corpus

Housing, Finance and the Macroeconomy (2014, unknown): “Silos (2007b) shows that adding rental housing as a choice greatly helps models such as Fernández-Villaverde and Krueger (2011) and Diaz and LuengoPrado (2010) explain the distribution of wealth by age, since the choices of renters who are younger and poorer on average are not well captured by model”
Implications of US Tax Policy for House Prices, Rents, and Homeownership (2018, methodology): “Using data from the 2007 American Community Survey, D´ıaz and Luengo-Prado (2010) compute the median property tax rate for the median house value and report a housing property tax rate of 0 .”
Consumption Dynamics During Recessions (2014, background): “19Diaz and Luengo-Prado [2010] reports that the typical fee charged by U.”