European Economic Association (EEA), Copenhagen [online]       -08/2021


• ERFIN Workshop 2021, SGH Warsaw School of Economics, Poland [online] -09/2021


• Reserve Bank of India, CAFRAL Research Seminar [online] -11/2021


• Recent trends in the real estate market, Narodowy Bank Polski, Poland [online] -11/2021


• 12th Annual Financial Market Liquidity (AFML), University of Budapest [online] -11/2021


• European Winter Meeting of the Econometric Society 2021 (reserve acceptance) [online] -12/2021

[Job Market Paper]

Monetary Policy, User Cost and Inequality: Homeowners versus Renters
- Author: Neha Gupta

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User costs of housing are a major part of a household’s expenditure. I empirically investigate the heterogeneous impact of an unanticipated expansionary monetary policy on housing markets and household tenurial decision by exploiting the user cost of housing channel. Drawing on a Swiss household panel data and daily interest rate futures, I find that the less financially constrained households are 3.45 percentage points more likely to become homeowners in case of unexpected decrease of 100 basis points in 3-month CHF Libor. The households in the upper income quartile with pillar 3a savings benefit the most in case of an unanticipated negative monetary policy shock. The real user cost expenses of renting also benefits significantly by a decrease of on average 19% from an unexpected expansionary monetary policy. Single family houses do not benefit from the shocks in the monetary policy. The findings highlight the importance of apartments and multifamily housing.     

- There is a substantial heterogeneity in the dynamics of house prices. The gap between lower and upper tier growth rates within one region varies substantially, as high as 78%. The growth margin is the highest in highly urbanized regions such as around Lake Geneva, Basel, or the Zurich-Zug-Luzern metropolitan area. The lowest growth rates for the region Jura with an increase of only 34% in nominal terms since 1985, which corresponds to a 10% negative growth in real terms.

- Using Spatial lag panel fixed effect models, I find that a reduction in the real mortgage rate by 1 percentage point increases middle tier real house prices by 0.6% and upper tier real prices by 1.2% on average. The lower tier house prices in Zurich increases by 2% and upper tier house prices by 3%.