Is Housing Wealth an 'ATM'?: The Relationship between Household Wealth, Home Equity Withdrawal, and Saving Rates

Klyuev, Vladimir; Mills, Paul S.

doi:10.2139/ssrn.920254

Cited by 5 publications

(6 citation statements)

References 3 publications

(3 reference statements)

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“…27 For fixed-rate mortgages, amortization terms of up to 40 years have lately become available, prompted by recent decisions of the CMHC and Genworth Financial to offer insurance on such mortgages. In the United States, a range of affordability products with low introductory rates and flexible repayment terms have gained popularity this decade (Klyuev and Mills, 2006). 28 While their 26 Constant monthly payments on a new mortgage are set up in such a way that they would allow the mortgage to be repaid in full, with interest, in 25 years.…”

Section: Choice Of Instrumentsmentioning

confidence: 99%

Show Me the Money: Access to Finance for Small Borrowers in Canada

Klyuev

2008

IMF Working Papers

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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. This paper examines access to business finance by Canadian small and medium-sized enterprises (SMEs) and to housing finance by Canadian households (particularly non-prime borrowers) against the background of a fairly concentrated and protected banking industry. It finds access broadly adequate for the former group. However, given the dominance of the large banks and their fairly low risk tolerance, financing of riskier projects is a challenge. Problems with venture capital, plausibly related to the prevalence of tax-advantaged labor-sponsored funds, exacerbate the situation for the most innovative SMEs. The paper also finds the market for housing finance to be highly advanced and sophisticated. However, non-prime mortgage financing is in its infancy in Canada, and further development of that sector (while avoiding the excesses that beset the U.S. market in the last few years) would be beneficial. More broadly, despite recent innovations, options available to Canadians for financing house purchases are still somewhat limited, with scarce availability of mortgage maturities beyond five years particularly surprising. Further advances in securitization could help progress in both of these areas.

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Section: Choice Of Instrumentsmentioning

confidence: 99%

Show Me the Money: Access to Finance for Small Borrowers in Canada

Klyuev

2008

IMF Working Papers

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“…The majority of the above papers examine the US data, for example, Lettau and Ludvigson (), Case et al. (), Davis and Palumbo (), Klyuev and Mills (), Carroll et al. () and Duca et al.…”

Section: Introductionmentioning

confidence: 99%

“…The majority of the above papers examine the US data, for example, Lettau and Ludvigson (2001), Case et al (2001), Davis and Palumbo (2001), Klyuev and Mills (2007), Carroll et al (2011) and Duca et al (2011). Those that focus on the international experience include Dvornak and Kohler (2003), Ludwig and Slok (2004), Case et al (2005), Carroll et al (2008), Slacalek (2009), Attanasio et al (2011), Aron et al (2012) and Aron and Muellbauer (2013).…”

Section: Introductionmentioning

confidence: 99%

How important are wealth effects on consumption in Canada?

Kichian

Mihic

2018

Canadian J of Economics

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We estimate the marginal propensity to consume from financial and housing wealth in Canada. The modelling framework of Carroll et al. (2011) that builds on the observed stickiness in consumption data is used. Estimations and inferences are conducted using identification-robust methods.The results provide support for the overall modelling strategy, but there are also important differences in the identification status of the econometric equations considered. Based on the most informative specification, we find that both types of wealth-financial and housing-have significant effects in Canada and that the former has a greater effect than the latter. A simple extension of the model that also accounts for non-price credit conditions shows that housing wealth may be relevant only during periods of easier access to credit. Finally, we find support for relatively high stickiness in consumption growth in Canada. Résumé. Quelle est l'importance des effets de richesse sur la consommation au Canada?On estime la propension marginale à consommer au Canada à partir de données sur la richesse financière et immobilière. On utilise le cadre conceptuel de Carroll et al.(2011) qui construit sur la viscosité observée des données de consommation utilisées. On construit les estimations et les inférences en utilisant des méthodes qui sont robustes au plan de l'identification. Les résultats supportent la stratégie générale du modèle, mais il existe aussi des différences importantes dans le statut d'identification des équations économétriques considérées. Sur la base de la spécification la plus informative, on découvre que les deux types de richesse -financière et immobilière -ont des effets significatifs au Canada, et que la première a un plus grand impact que la seconde. Une simple extension de ce modèle qui tient aussi compte des conditions de crédit qui ne portent pas sur les prix montre que la richesse immobilière peut être pertinente seulement dans les périodes d'accès facile au crédit. Finalement, les résultats supportent la proposition qu'il y a forte viscosité relative dans la croissance de la consommation au Canada.

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“…Faulkner-MacDonagh (2004) estimates a longrun relationship between the saving rate and household net worth, inflation, interest rates, and government spending and finds this decline reflects improvement in the fiscal balance, success in fighting inflation, and increases in households' net worth. Klyuev and Mills (2006), using an error-correction framework on saving behavior in four Anglo-Saxon economies, find that, in contrast to the experience in the United States, the decline in the Canadian household saving rate in recent years has not coincided with a rise in home-equity withdrawal.…”

Section: Macroeconomic Environmentmentioning

confidence: 79%

Northern Star: Canada's Path to Economic Prosperity

Klyuev

Mühleisen²,

Bayoumi

2007

Occasional Papers

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The following conventions are used in this publication:• In tables, a blank cell indicates "not applicable," ellipsis points ( . . .) indicate "not available," and 0 or 0.0 indicates "zero" or "negligible." Minor discrepancies between sums of constituent figures and totals are due to rounding.• An en dash (-) between years or months (for example, 2005-06 or January-June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2005/06) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2006).• "Billion" means a thousand million; "trillion" means a thousand billion.• "Basis points" refer to hundredths of 1 percentage point (for example, 25 basis points are equivalent to ¼ of 1 percentage point).As used in this publication, the term "country" does not in all cases refer to a territorial entity that is a state as understood by international law and practice. As used here, the term also covers some territorial entities that are not states but for which statistical data are maintained on a separate and independent basis. 4.3. Impact of GDP Volatility on Forecast Quality 5.1. Old-Age Dependency Ratios in Selected G-7 Countries 5.2. Government Spending on Old-Age Pensions 5.3. Projected Canada Pension Plan Contribution Rates and Pension Reserves 6.1. Effects on Real GDP of Immediate versus Delayed Wage Tax Cuts 6.2. Effects on Real GDP of Immediate versus Delayed Corporate Income Tax Cuts 6.3. Effects of Alternative Parameterizations on Impact of a Cut in Transfers and in the Wage Tax Rate on Real GDP 6.4. Effects of Alternative Parameterizations on Impact of a Cut in Transfers and in the Corporate Income Tax Rate on Real GDP

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Is Housing Wealth an 'ATM'?: The Relationship between Household Wealth, Home Equity Withdrawal, and Saving Rates

Cited by 5 publications

References 3 publications

Show Me the Money: Access to Finance for Small Borrowers in Canada

Show Me the Money: Access to Finance for Small Borrowers in Canada

How important are wealth effects on consumption in Canada?

Northern Star: Canada's Path to Economic Prosperity

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