Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223268
Authors: 
Etheridge, Ben
Year of Publication: 
2019
Series/Report no.: 
IFS Working Papers No. W19/24
Abstract: 
I characterize how house price shocks affect consumption inequality using a life-cycle model of housing and non-housing consumption with incomplete markets. I derive analytical expressions for the dynamics of inequalities and use these to analyze large house prices swings seen in the UK. I show that movements in consumption inequality were large, that they correspond with the theoretical predictions qualitatively, and that the model explains a large fraction of the movements quantitatively. I demonstrate the accuracy of this analysis using an extended model's full non-linear solution. Finally, accounting for house price shocks alters estimates of labour-income risks using cross-sectional data.
Subjects: 
Consumption inequality
Wealth effect
Collateral effect
Housing
JEL: 
D31
D91
E21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
899.87 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.