Essays on Household Balance Sheets and Consumption.

Consumption;Household Balance Sheet;Housing Markets;Monetary Policy;Economics;Business and Economics;Economics

Aladangady, AdityaStafford, Frank P. ;

University of Michigan

关键词: Consumption;    Household Balance Sheet;    Housing Markets;    Monetary Policy;    Economics;    Business and Economics;    Economics;   

Others  :  https://deepblue.lib.umich.edu/bitstream/handle/2027.42/108951/adityaa_1.pdf?sequence=1&isAllowed=y

瑞士|英语

来源: The Illinois Digital Environment for Access to Learning and Scholarship

【 摘 要 】

This dissertation seeks to understand the relationships between monetary policy, housingmarkets, and household consumption behavior. The three chapters establish a causal relationshipbetween these variables using disaggregated data and discuss potential aggregateeffects and policy implications. The study first develops an housing model with heterogeneousconstruction costs to analyze price and construction dynamics following a shock tointerest rates. Land-constrained areas exhibit larger price and small construction responsesrelative to unconstrained areas where new homes can be built cheaply. Using an MSAlevelpanel linked to land availability and zoning regulations data, these results are largelyconfirmed empirically.This result forms the basis for identifying the marginal propensity to consume out ofhousing. Following a shock to interest rates, homeowner consumption responses are comparedbetween land constrained with house price gains to unconstrained areas with littleprice growth. Under the assumption that land availability and zoning regulations do notaffect consumption responses directly, this identifies the marginal propensity to consume(MPC) out of housing.Results from two household panels linked to non-public geographic identifiers are presented.Identified responses show homeowners exhibit an MPC of 0.04-0.06 out of homeequity with little response for renters. These MPCs fall over the life-cycle with MPCs ashigh as 0.08 for those under 40 and 0.04 for those at retirement. Furthermore, credit constrainedhouseholds exhibit larger MPCs with negligible effects on those with high liquidityor low leverage. These results are indicative of a strong role for collateral effects rather thanwealth effects in driving the consumption response to housing.The study also shows that these effects result in an quantitatively important ;;homeownerbalance sheet channel” for monetary policy. Loose money causes higher demand for housing,raising house values in inelastic-supply cities. This loosens credit constraints for homeownersin those cities, stimulating consumption. This study is the first to empirically identify thischannel.