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Title: Rent or Buy? The Role of Lifetime Experiences of Macroeconomic Shocks within and across Countries

Citation Type: Miscellaneous

Publication Year: 2017

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Abstract: There are vast differences in homeownership rates across countries. We show that, both within and across countries, people’s decision to buy versus rent is strongly affected by macroeconomic shocks that they have experienced over their lifetimes so far. In a simple model with experience-based learning, we show that households are more likely to own their homes if they have experienced high inflation or high growth in the housing market. Using household-level data from 20 countries in the European Central Bank’s Household Finance and Consumption Survey (HFCS), we find that a 1 pp increase in experienced inflation predicts an increase of 8 percentage points in homeownership at the national level, and an increase of 45 percent in the odds of homeownership at the individual level. The results are robust to including a vast array of . . .

Url: https://www.banque-france.fr/sites/default/files/steiny-slides.pdf

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Authors: Malmendier, Ulrike; Steiny, Alexandra

Publisher: UC Berkeley

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Other

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