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Title:Re-examining the decline in the US saving rate: The impact of mortgage equity withdrawal PDF Logo
Authors:Caporale, Guglielmo Maria
Costantini, Mauro
Paradiso, Antonio
Issue Date:2012
Series/Report no.:Discussion Papers, German Institute for Economic Research, DIW Berlin 1232
Abstract:In this paper we examine the role of mortgage equity withdrawal in explaining the decline of the US saving rate, since when house prices rise and mortgage rates are low, homeowners have an incentive to withdraw housing equity and this may affect the saving rate. We estimate a Vector Error Correction (VEC) model including the saving rate, asset prices, equity withdrawal and interest rates and find that indeed mortgage equity withdrawal is a key determinant of the observed saving pattern.
Subjects:Saving rate
Mortgage equity withdrawal
Asset prices
Mortgage rates
Vector Error Correction
Impulse response analysis
JEL:C32
E21
O51
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des DIW
DIW-Diskussionspapiere

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