Immigration, borrowing constraints and housing market volatility in general equilibrium

Master thesis English OPEN
Onshuus, Helene;
(2016)

A loan-to-value borrowing constraint is a significant restriction on household behavior. All policy intervention seeks to steer agents' behavior away from what individual agents would consider optimal in the absence of restrictions. In the wake of the financial crisis i... View more
  • References (17)
    17 references, page 1 of 2

    2 Existing Literature 3 2.1 Pecuniary externalities and overborrowing . . . . . . . . . . . . . . . . . . 4 2.2 Aggregate demand externalities and debt-deleveraging . . . . . . . . . . . 5

    3 The stylized model 6 3.1 Timing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.2 Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.2.1 The tradable sector . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.2.2 The non-tradable sector . . . . . . . . . . . . . . . . . . . . . . . . 9 3.3 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.3.1 Unconstrained agents . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.3.2 Constrained agents . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.4 Equilibrium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 3.4.1 The unconstrained economy . . . . . . . . . . . . . . . . . . . . . . 13 3.4.2 The constrained economy . . . . . . . . . . . . . . . . . . . . . . . 14 3.5 Housing market volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 3.5.1 Equilibrium after the shock . . . . . . . . . . . . . . . . . . . . . . 16 3.5.2 Market clearing in the unconstrained economy . . . . . . . . . . . 17 3.5.3 Market clearing in the constrained economy . . . . . . . . . . . . . 18 3.5.4 Results from numerical simulation . . . . . . . . . . . . . . . . . . 19

    4 Extension: Rental market 20 4.1 Competitive rental sector . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 4.2 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 4.2.1 Unconstrained agents . . . . . . . . . . . . . . . . . . . . . . . . . 23 4.2.2 Constrained agents . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 4.3 Equilibrium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 4.3.1 The constrained economy . . . . . . . . . . . . . . . . . . . . . . . 25 4.4 Housing market volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 4.4.1 Equilibrium after the shock . . . . . . . . . . . . . . . . . . . . . . 27 4.4.2 Market clearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

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