Housing, Consumption, and Credit Constraints

By A. Lehnert. 2004

135 citations recorded by the source corpus.

I test the credit-market effects of housing wealth shocks by estimating the consumption elasticity of house price shocks among households in different age quintiles. Younger households face faster expected income growth and hence would like to borrow more than older households. I estimate consumption elasticities from housing wealth by age quintile to be {4; 0; 3; 8; 3} percent. As predicted by theory, the youngest group has a higher elasticity of consumption than the next two age quintiles. That the consumption of the age quintile on the verge of retirement is responsive to housing wealth is also not surprising: I show that these households are likeliest to \\"downsize\\" their house and thus realize any capital gains.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/ea625ae230c360758d688576dde4d696136e5b6e

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Citations in the corpus

Do Family Wealth Shocks Affect Fertility Choices? Evidence from the Housing Market (2013, background): “*Lovenheim: Cornell University; Mumford: Purdue University. We thank Mark Hoekstra, Kevin Milligan, H. Elizabeth Peters, Seth Sanders, and two anonymous referees for helpful comments as well as seminar participants at Purdue University, the University of Minnesota, IUPUI, the University of Texas at ”
House Price Gains and U.S. Household Spending from 2002 to 2006 (2014, background): “…of wealth and financial shocks matters 3 The broader literature on housing wealth effect is far too large to be fully summarized here, but it includes Disney, Gathergood, and Henley (2010), Muellbauer and Murphy (1997), Attanasio and Weber (1994), Lehnert (2004), 4 for the macro economy.”
Household Balance Sheets, Consumption, and the Economic Slump* (2013, unknown): “It includes Muellbauer and Murphy (1997), Attanasio and Weber (1994), Lehnert (2004), Case, Quigley, and Shiller (2005 and 2013), Haurin and Rosenthal (2006), Campbell and Cocco (2007), Greenspan and Kennedy (2007), and Bostic, Gabriel, and Painter (2009), and Carroll, Otsuka, and Slacalek (2011)).”
Loan Originations and Defaults in the Mortgage Crisis: The Role of the Middle Class (2016, unknown): “…in areas with high rates of house price appreciation from 2002 to 2006, particularly through second liens and cash-out refinancing (consistent with Hurst and Stafford 2004; Lehnert 2004; Campbell and Cocco 2007; Bostic, Gabriel, and Painter 2009; Mian and Sufi 2011; Brown, Stein, and Zafar 2013).”