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Title:User costs of housing when households face a credit constraint: evidence for Germany PDF Logo
Authors:Dümmler, Tobias
Kienle, Stephan
Issue Date:2010
Series/Report no.:Discussion Paper Series 1: Economic Studies 2010,12
Abstract:We develop a formula for user costs of housing on the basis of a neoclassical approach to housing investment which does not impose a perfect capital market assumption. We suggest that the definition for the user costs of housing should be extended by an additional term which mirrors the credit constraints a household would be faced with. This extension term consists of the inflation gap between consumer and house price inflation multiplied with an average loan-to-value ratio and the real house prices. The empirical relevance of our finding is confirmed by a VECM. A time series for the user costs of housing is calculated using this extended definition.
Subjects:Housing investments
user costs of housing
Document Type:Working Paper
Appears in Collections:Discussion Paper Series 1: Economic Studies, Deutsche Bundesbank

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