Macroeconomics and Housing
Friday, Jan. 4, 2019 8:00 AM - 10:00 AM
- Chair: Charles Ka Yui Leung, City University of Hong Kong
Housing Wealth and Consumption: New Evidence from Household-Level Panel Data
AbstractThis paper provides new estimates of the response of household consumption to changes in housing wealth using household-level data from the Panel Study of Income Dynamics during the 1999-2013 period. A one percent increase in housing values is associated with a 0.02-0.05 percent increase in real, non-durables consumption. These estimates elasticities are significantly smaller relative to previously published studies that have used aggregate data (Campbell and Cocco (2007) and Mian, Sufi, and Rao (2013)). In addition, consistent with findings by Kaplan, Mitman, and Violante (2015), which used data aggregated to the county-level, we do not find evidence of a collateral constraints channel driving the consumption responses to housing wealth.
Out-of-Town Home Buyers and City Welfare
AbstractThe major cities of the world have attracted a flurry of out-of-town (OOT) home buyers.
Such capital inflows affect housing affordability, the spatial distribution of residents, con-
struction, labor income, wealth, and ultimately welfare. We develop a spatial equilibrium
model of a city with substantial heterogeneity among residents. We calibrate the model
to the New York and Vancouver metro areas. The observed increase in OOT purchases is
associated with 1.1% (5.0%) higher house prices and a 0.1% (0.34%) welfare loss in New
York (Vancouver). Taxing OOT buyers can turn welfare losses into gains when tax revenues
finance a local public good.
Are Asset Price Movements Driven by International Capital Flows? The Case of Emerging Markets
AbstractLarge swings in developing countries’ asset price movements are often associated with volatile capital flows. This paper develops a multi-step empirical model and (a) finds that temporary components of the international capital flows (“hot money”) are important, even for the Foreign Direct Investment (FDI), (b) taking that into account, the prediction of neoclassical growth model actually holds for the FDI but not the Portfolio Investment (PI) in our cross-country sample. We also confirm that in real terms, net FDI and PI inflows are correlated with the stock and housing prices. Comparing across countries, the magnitude of the impulse responses of housing price and stock price to a hot money shock are negatively correlated to the per capita real GDP and quality-adjusted human capital index of the recipient countries.
- E0 - General
- R0 - General