Housing investment: What makes it so volatile? Theory and evidence from OECD countries |
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Authors: | Quoc Hung Nguyen |
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Institution: | School of Economics, University of Hyogo, 8-2-1 Gakuen-Nshimachi, Nishi-ku, Kobe, Hyogo 651-2197, Japan |
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Abstract: | This paper explains how mortgage market liberalization can introduce greater volatility in the housing market, which is a stylized fact documented from OECD countries, with a DSGE model where households face a credit constraint and housing is used as collateral. The housing collateral constraint creates a link between the housing market and borrowing capacity, a link that amplifies the response of housing demand to technology shocks and strengthens in economies with more liberalized mortgage markets. |
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Keywords: | Housing investment Collateral constraint Mortgage markets |
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