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宏观workshop:Breaking the Commitment Device: The Effect of Home Equity Withdrawal on Consumption, Saving, and Welfare
发布日期：2020-12-03 12:00 来源：
时间：2020年12月3日 02:30 下午 北京，上海
加入 Zoom 会议
https://zoom.com.cn/j/95492165716?pwd=WUVFZnBZSlg5YTZrWURuTWxPeklvQT09会议号：954 9216 5716
密码：284354Title: Breaking the Commitment Device: The Effect of Home Equity Withdrawal on Consumption, Saving, and Welfare
Speaker：Patrick Moran
Abstract：Financial innovation and deregulation have given households an unprecedented ability to access home equity. To what extent is this beneficial? On one hand, access to home equity enables households to better smooth consumption and self-insure against risk. On the other hand, if housing acts as a savings commitment device, then more liquidity may weaken commitment. In this paper, we evaluate the costs and benefits of greater access to home equity by estimating a model that captures these two opposing channels. Model estimates are validated using a reform that abruptly legalized home equity withdrawal in Texas. In both the data and the model, we observe a 3% increase in nondurable consumption following the reform. According to our estimates, weakened commitment and consumption smoothing each account for half of the observed increase in consumption. Finally, we find that the cost of weakened commitment dominates and that welfare has declined due to the introduction of home equity withdrawal.
Paper Download：https://www.economics.ox.ac.uk/materials/jm_papers/3926/moran-jmp.pdf
About the speaker：Patrick Moran is an assistant professor in the Department of Economics at the University of Copenhagen, a member of the Center for Economic Behavior and Inequality (CEBI), and a visiting scholar at the Institute for Fiscal Studies (IFS). He obtained his PhD in economics at the University of Oxford in 2020. His research focuses on macroeconomics, household finance, and public economics.
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宏观workshop:Breaking the Commitment Device: The Effect of Home Equity Withdrawal on Consumption, Saving, and Welfare
发布日期：2020-12-03 12:00 来源：
时间：2020年12月3日 02:30 下午 北京，上海
加入 Zoom 会议
https://zoom.com.cn/j/95492165716?pwd=WUVFZnBZSlg5YTZrWURuTWxPeklvQT09会议号：954 9216 5716
密码：284354Title: Breaking the Commitment Device: The Effect of Home Equity Withdrawal on Consumption, Saving, and Welfare
Speaker：Patrick Moran
Abstract：Financial innovation and deregulation have given households an unprecedented ability to access home equity. To what extent is this beneficial? On one hand, access to home equity enables households to better smooth consumption and self-insure against risk. On the other hand, if housing acts as a savings commitment device, then more liquidity may weaken commitment. In this paper, we evaluate the costs and benefits of greater access to home equity by estimating a model that captures these two opposing channels. Model estimates are validated using a reform that abruptly legalized home equity withdrawal in Texas. In both the data and the model, we observe a 3% increase in nondurable consumption following the reform. According to our estimates, weakened commitment and consumption smoothing each account for half of the observed increase in consumption. Finally, we find that the cost of weakened commitment dominates and that welfare has declined due to the introduction of home equity withdrawal.
Paper Download：https://www.economics.ox.ac.uk/materials/jm_papers/3926/moran-jmp.pdf
About the speaker：Patrick Moran is an assistant professor in the Department of Economics at the University of Copenhagen, a member of the Center for Economic Behavior and Inequality (CEBI), and a visiting scholar at the Institute for Fiscal Studies (IFS). He obtained his PhD in economics at the University of Oxford in 2020. His research focuses on macroeconomics, household finance, and public economics.
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