scholarly journals Liquidity Constraints in the U.S. Housing Market

2021 ◽  
Author(s):  
Corina Boar ◽  
Denis Gorea ◽  
Virgiliu Midrigan
Keyword(s):  
Life Cycle ◽  
Housing Market ◽  
Liquidity Constraints ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Home Equity ◽  
Welfare Gains ◽  
The U.S

Abstract We study the severity of liquidity constraints in the U.S. housing market using a life-cycle model with uninsurable idiosyncratic risks in which houses are illiquid, but agents can extract home equity by refinancing their mortgages. The model implies that four-fifths of homeowners are liquidity constrained and willing to pay an average of 13 cents to extract an additional dollar of liquidity from their home. Most homeowners value liquidity for precautionary reasons, anticipating the possibility of income declines and the need to make mortgage payments. The model reproduces well the observed response of consumption to tax rebates and mortgage relief programs and predicts large welfare gains from policies aimed at providing temporary liquidity relief to homeowners.

Optimal Life Cycle Unemployment Insurance

2015 ◽  
Vol 105 (2) ◽  
pp. 816-859 ◽  
Author(s):  
Claudio Michelacci ◽  
Hernán Ruffo
Keyword(s):  
Human Capital ◽  
Life Cycle ◽  
Moral Hazard ◽  
Unemployment Insurance ◽  
Older Workers ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Welfare Gains ◽  
High Return ◽  
Unemployment Risk

We argue that US welfare would rise if unemployment insurance were increased for younger and decreased for older workers. This is because the young tend to lack the means to smooth consumption during unemployment and want jobs to accumulate high-return human capital. So unemployment insurance is most valuable to them, while moral hazard is mild. By calibrating a life cycle model with unemployment risk and endogenous search effort, we find that allowing unemployment replacement rates to decline with age yields sizeable welfare gains to US workers. (JEL D91, E24, J13, J64, J65)

scholarly journals Asymmetric Consumption Smoothing

2021 ◽  
Vol 111 (1) ◽  
pp. 192-230
Author(s):  
Brian Baugh ◽  
Itzhak Ben-David ◽  
Hoonsuk Park ◽  
Jonathan A. Parker
Keyword(s):  
Life Cycle ◽  
Credit Card ◽  
Liquidity Constraints ◽  
Mental Accounting ◽  
Consumption Smoothing ◽  
Credit Card Debt ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Level Data ◽  
Tax Refunds

Analyzing account-level data from an account aggregator, we find that households increase consumption when they receive expected tax refunds, as if they face liquidity constraints. However, these same households smooth consumption when making payments in other years, primarily by transferring funds among liquid accounts. Even households carrying credit card debt smooth consumption when making payments, and even highly liquid households spend out of refunds. This behavior is inconsistent with pure liquidity constraints or hand-to-mouth behavior and is most consistent with a mental accounting life-cycle model. (JEL D12, E21, G51, H24, H31)

scholarly journals Intergenerational Transfers and the Accumulation of Wealth

1994 ◽  
Vol 8 (4) ◽  
pp. 145-160 ◽  
Author(s):  
William G Gale ◽  
John Karl Scholz
Keyword(s):  
Life Cycle ◽  
Intergenerational Transfers ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Net Worth ◽  
Household Data ◽  
The U.S

This paper uses household data to provide direct estimates of intergenerational transfers as a source of wealth. The authors distinguish between intended transfers (for example, gifts to other households) and possibly unintended transfers (bequests) and estimate that intended transfers account for at least 20 percent of net worth. Thus, a significant portion of the U.S. wealth cannot be explained by the life-cycle model, even when the model is augmented to allow for bequests. Estimated bequests can account for an additional 31 percent of net worth. The authors also show that transfers among living people are about half as large as bequests.

Company life cycle model: The influence of interior and exterior factors

2020 ◽  
Author(s):  
Oleg Malafeyev ◽  
Irina Zaitseva ◽  
Sergey Sychev ◽  
Gennady Badin ◽  
Ilya Pavlov ◽  
...  
Keyword(s):  
Life Cycle ◽  
Life Cycle Model ◽  
Cycle Model
Sign in / Sign up

Export Citation Format

Share Document