The Effect of Housing on Portfolio Choice: A Reappraisal Using French Data

27 Pages Posted: 1 Feb 2013

See all articles by Denis Fougère

Denis Fougère

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); National Center for Scientific Research (CNRS); IZA Institute of Labor Economics

Mathilde Poulhes

affiliation not provided to SSRN

Date Written: November 2012

Abstract

Chetty and Szeidl (2012) propose to estimate the effect of housing on portfolio choice by distinguishing between the effect of mortgage debt and the effect of home equity and by endogenizing these two variables. When replicating their study with French data, we obtain similar qualitative results: an increase in mortgage debt(respectively, in home equity) reduces (respectively, raises) stockholding. However, while in the US the wealth effect of holding more home equity is cancelled out by the risk effect of owning a more expensive house, in France the wealth effect dominates the risk effect. We propose some explanations for this discrepancy.

Keywords: housing, mortgage debt, portfolio choice, property value

JEL Classification: C36, D14, G11, R21

Suggested Citation

Fougere, Denis and Poulhes, Mathilde, The Effect of Housing on Portfolio Choice: A Reappraisal Using French Data (November 2012). CEPR Discussion Paper No. DP9213, Available at SSRN: https://ssrn.com/abstract=2210182

Denis Fougere (Contact Author)

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE) ( email )

15, Boulevard Adolphie PINARD
92245 Malakoff Cedex
France
+33 1 4117 7713 (Phone)
+33 1 4117 7634 (Fax)

National Center for Scientific Research (CNRS)

3, rue Michel-Ange
Paris cedex 16, 75794
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Mathilde Poulhes

affiliation not provided to SSRN

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