Cover IMF Working Papers
Mortgage Market Development, Savings, and Growth
Author: Xiaowei Li
Series:
IMF Working Papers
Volume/Issue:
Volume 2001: Issue 036
Language:
English
Publication Date:
01 Mar 2001
DOI:
https://doi.org/10.5089/9781451845457.001
ISBN:
9781451845457
ISSN:
1018-5941
Pages:
27
Keywords:
WP; down payment; Middle East; Mortgage; Savings; Growth; liquidity constraint; down payment ratio; savings rate; consumption pattern; ratio effect; Housing; Mortgages; Liquidity; Housing prices; Consumption
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Jappelli and Pagano (1994) argues that tightening the borrowing constraints in the mortgage markets promotes savings. Employing a six-period overlapping generations model with endogenous growth and a method of simulation calibrated on the Middle East, this paper demonstrates that the above argument is tenable only if consumers do not alter their tenure choices. Consumers do, however, postpone or forsake the purchase of a house under severely restrictive borrowing constraints, causing the savings and growth rates to fall. Therefore, for countries with scarce mortgage availability like those in the Middle East, expanding the mortgage markets to some extent is conducive to savings and growth.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund