Monetary Policy, User Cost and Inequality: Homeowners versus Renters
Journal
SSRN
Type
journal article
Date Issued
2020-07-31
Author(s)
Gupta, Neha
Abstract
User costs of housing are a major part of a household’s expenditure.
I empirically investigate the heterogeneous impact of an unanticipated
expansionary monetary policy on housing markets and household
tenurial decision by exploiting the user cost of housing channel.
Drawing on a Swiss household panel data and daily interest rate futures,
I find that the less financially constrained households are 3.45
percentage points more likely to become homeowners in case of unexpected
decrease of 100 basis points in 3-month CHF Libor. The
households in the upper income quartile with pillar 3a savings benefit
the most in case of an unanticipated negative monetary policy shock.
The real user cost expenses of renting also benefits significantly by a
decrease of on average 19% from an unexpected expansionary monetary
policy. Single family houses do not benefit from the shocks in
the monetary policy. The findings highlight the importance of apartments
and multifamily housing.
I empirically investigate the heterogeneous impact of an unanticipated
expansionary monetary policy on housing markets and household
tenurial decision by exploiting the user cost of housing channel.
Drawing on a Swiss household panel data and daily interest rate futures,
I find that the less financially constrained households are 3.45
percentage points more likely to become homeowners in case of unexpected
decrease of 100 basis points in 3-month CHF Libor. The
households in the upper income quartile with pillar 3a savings benefit
the most in case of an unanticipated negative monetary policy shock.
The real user cost expenses of renting also benefits significantly by a
decrease of on average 19% from an unexpected expansionary monetary
policy. Single family houses do not benefit from the shocks in
the monetary policy. The findings highlight the importance of apartments
and multifamily housing.
Language
English
Keywords
Monetary policy
Housing
inequality
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Quantitative Economic Methods
Refereed
No
Eprints ID
263617
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