G2TT
来源类型Discussion paper
规范类型论文
来源IDDP5658
DP5658 Monetary Persistence, Imperfect Competition and Staggering Complementarities
Dennis Snower; Christian Merkl
发表日期2006-05-28
出版年2006
语种英语
摘要We develop an OLG model aimed at explaining the joint determination of housing prices, rents, and interest rates, in an environment featuring a positive home ownership bias and individual borrowing limits that generate a mismatch between desired and available funds to finance housing purchases. Individual heterogeneity on this mismatch gives rise to three different types of households: renters, landlords (i.e. buy-to-let investors, who provide the stock of houses for rent) and homebuyers who do not participate in the rental market. We investigate the conditions under which two alternative stationary equilibria may coexist: (i) a low valuation equilibrium (LVE) in which landlords do not exhaust their borrowing limits; and (ii) a high valuation one (HVE) where every household is financially constrained at the time of purchasing its housing stock. In a HVE (relative to the LVE) the volume of buy- to-let investment, the price-to-rent ratio and the housing price are higher while the interest rate is lower. Due to binding borrowing constraints, in a HVE further reductions in the interest rate only bear a positive networth effect through a reduction of the cost of repaying outstanding mortgaged debt, which fuels future availability of funds, thus sustaining the higher demand for credit. More generally, coexistence of both types of equilibria provides a rationale for the existence of speculative paths from a LVE to a HVE.
主题International Macroeconomics
关键词Price-to-rent ratio Collateral constraints Buy-to-let investment Multiple equilibria
URLhttps://cepr.org/publications/dp5658
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/534537
推荐引用方式
GB/T 7714
Dennis Snower,Christian Merkl. DP5658 Monetary Persistence, Imperfect Competition and Staggering Complementarities. 2006.
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