Housing, household debt and policy

Date: 11-12 December 2017
Location:Wellington, New Zealand

On 11-12 December 2017, the Reserve Bank of New Zealand hosted a conference on housing, household debt and policy. High house prices and modest income growth create significant tensions and distributional issues across generations. Elevated household debt and high house prices, combined with subdued inflation outcomes, also pose a challenge for both monetary and macroprudential policy.

Submissions of theoretical and empirical papers that explore the dynamics of housing markets and household debt; the implications of housing cycles for the macro economy; and the consequences of those dynamics for monetary and macropudential policy were invited. Questions of interest may have included:

  • What drives residential investment and household mortgage choice?
  • How do developments in house prices affect economic inequality?
  • How do housing market dynamics influence consumption and saving behaviour?
  • How does household debt and/or leverage affect mortgage default risk and financial stability?
  • How does household debt influence the transmission of monetary policy?
  • What is the optimal mix of monetary, macroprudential and other policies?
  • And should distributional considerations influence monetary and macroprudential policymaking?

Keynote speakers

Christopher Carroll (Johns Hopkins University)
Greg Kaplan (University of Chicago)
Dirk Krueger (University of Pennsylvania)

Organising committee

Fang Yao
Robert Kirkby
Jonathan Chiu
Christie Smith

Programme of the conference

Session 1: Keynote 1

Session Chair: Christie Smith - Reserve Bank of New Zealand

The normal science of heterogeneous agents macroeconomics

Presented by: Christopher Carroll - Johns Hopkins University

View the discussion slides (PDF 1.4MB)

Session 2: Housing markets and macroeconomy

Session Chair: Anella Munro - Reserve Bank of New Zealand

Housing finance, boom-bust episodes, and the macroeconomy

View the paper: Housing finance, boom-bust episodes, and the macroeconomy (PDF 532KB)

Presented by: Carlos Garriga - Federal Reserve Bank of St. Louis

View the presentation slides (PDF 388KB)

Discussant: Andrew Coleman - University of Otago

View the discussion slides (PPTX 101KB)

Consumption responses to house price heterogeneity

View the paper: Consumption responses to house price heterogeneity (PDF 633KB)

Presented by: James Graham - New York University

View the presentation slides (PDF 792KB)

Discussant: Karsten Chipeniuk - Reserve Bank of New Zealand

View the discussion slides (PPTX 112KB)

Session 3: Household debt and consumption spending

Session Chair: Karsten Chipeniuk - Reserve Bank of New Zealand

Household leverage and the housing wealth effect

View the paper: Household leverage and the housing wealth effect (PDF 1.3MB)

Presented by: Fang Yao - Reserve Bank of New Zealand

View the presentation slides (PDF 2.2MB)

Discussant: Carlos Garriga - Federal Reserve Bank of St. Louis

View the discussion slides (PPTX 271KB)

The effect of rising household debt on spending in Australia

Presented by: Fiona Price - Reserve Bank of Australia

Discussant: Selva Baziki - Central Bank of the Republic of Turkey

Paper and slides currently unavailable

Session 4: Keynote 2

Session Chair: Fang Yao - Reserve Bank of New Zealand

Intergenerational redistribution in the great recession

View the paper: Intergenerational redistribution in the great recession (PDF 622KB)

Presented by: Dirk Krueger - University of Pennsylvania

View the presentation slides (PDF 770KB)

Session 5: Keynote 3

Session Chair: Robert Kirkby - Victoria University of Wellington

What would you do with $500? Spending responses to gains, losses, news and loans

Presented by: Greg Kaplan - University of Chicago, joint with Andreas Fuster and Basit Zafar

View the presentation slides (PDF 3.6MB)

Session 6: The role of housing and its implications for policies

Session Chair: Punnoose Jacob - Reserve Bank of New Zealand

Monetary policy, heterogeneity, and the housing channel

View the paper: Monetary policy, heterogeneity, and the housing channel (PDF 460KB)

Presented by: Aaron Hedlund - University of Missouri

View the presentation slides (PDF 542KB)

Discussant: Robert Kirkby - Victoria University of Wellington

View the discussion slides (PDF 246KB)

Tax, credit constraints, and the big costs of small inflation

View the paper: Tax, credit constraints, and the big costs of small inflation (PDF 372KB)

Presented by: Andrew Coleman - University of Otago

View the presentation slides (PPTX 3.3MB)

Discussant: Aaron Hedlund - University of Missouri

View the discussion slides (PDF 258KB)

Session 7: Understand the drivers of housing market

Session Chair: Ashley Dunstan - Reserve Bank of New Zealand

Temptation, commitment, and hand-to-mouth consumers

View the paper: Temptation, commitment, and hand-to-mouth consumers (PDF 522KB)

Presented by: Patrick Moran - University of Oxford

View the presentation slides (PDF 245KB)

Discussant: Fang Yao - Reserve Bank of New Zealand

View the discussion slides (PPTX 351KB)

Negative gearing tax and welfare: A quantitative study for the Australian housing market

View the paper: Negative gearing tax and welfare: A quantitative study for the Australian housing market (PDF 847KB)

Presented by: Yunho Cho - University of Melbourne

View the presentation slides (PDF 537KB)

Discussant: Fiona Price - Reserve Bank of Australia

Session 8: Credit and mortgage default

Session Chair: John McDermott - Reserve Bank of New Zealand

What drives metropolitan house prices in California?

View the paper: What drives metropolitan house prices in California? (PDF 3MB)

Presented by: Lasse Bork - Aalborg University

View the presentation slides (PDF 2.3MB)

Discussant: Kirdan Lees - Sense Partners

View the discussion slides (PPTX 993KB)

Do loan-to-value caps generate additional general-purpose loans?

View the paper: Do loan-to-value caps generate additional general-purpose loans? (PDF 6.8MB)

Presented by: Selva Baziki - Central Bank of the Republic of Turkey

View the presentation slides (PDF 4.5MB)

Discussant: Ashley Dunstan - Reserve Bank of New Zealand

View the discussion slides (PPTX 300KB)