Does the rental housing market stabilize the economy?: a micro and macro perspective

Rubio, Margarita; Rubaszek, Michal

Abstract

© 2019, The Author(s). The size of the rental housing market in most countries around the globe is small. In this article, we claim that this may be detrimental to macroeconomic stability. We do it in three steps. First, using survey data for Poland, a country with a high homeownership ratio, we discuss microeconomic housing tenure choice determinants. Second, with a panel of 28 EU countries over the period 2004–2017, we provide evidence that the response of house prices to macroeconomic fundamentals is attenuated by the size of the private rental market. Third, we propose a DSGE model in which households satisfy housing needs both by owning and by renting. By simulating the model, we show that reforms enhancing the rental housing market contribute to macroeconomic stability. We conclude by formulating policy recommendations.

Citation

Rubio, M., & Rubaszek, M. (2019). Does the rental housing market stabilize the economy?: a micro and macro perspective. Empirical Economics, https://doi.org/10.1007/s00181-019-01638-z

• Journal Article Type: Article
• Acceptance Date: Jan 30, 2019
• Online Publication Date: Feb 12, 2019
• Publication Date: Feb 12, 2019
• Deposit Date: Apr 24, 2019
• Publicly Available Date: Feb 13, 2020
• Journal: Empirical Economics
• Print ISSN: 0377-7332
• Electronic ISSN: 1435-8921
• Publisher: Springer Verlag
• Peer Reviewed: Peer Reviewed
• DOI: https://doi.org/10.1007/s00181-019-01638-z
• Keywords: Economics and Econometrics; Statistics and Probability; Social Sciences (miscellaneous); Mathematics (miscellaneous)
• Public URL: https://nottingham-repository.worktribe.com/output/1541936
• Publisher URL: https://link.springer.com/article/10.1007%2Fs00181-019-01638-z
• Additional Information: Received: 15 February 2018; Accepted: 30 January 2019; First Online: 12 February 2019; : ; : The authors declare that they have no conflict of interest.; : This article does not contain any studies with human participants or animals performed by any of the authors.