Mortgage Market Development, Savings, and Growth

March 1, 2001

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Format: Chicago

Xiaowei Li. Mortgage Market Development, Savings, and Growth, (USA: International Monetary Fund, 2001) accessed September 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Asset and liability management, Consumption, Financial institutions, Housing, Housing prices, Liquidity, Mortgages, National accounts, Prices

Keywords: Consumption, Consumption pattern, Down payment, Down payment ratio, Growth, Housing, Housing prices, Liquidity, Liquidity constraint, Middle East, Mortgage, Mortgages, Ratio effect, Savings, Savings rate, WP

Publication Details

Pages:

27
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/036
Stock No:

WPIEA0362001
ISBN:

9781451845457
ISSN:

1018-5941

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