A Household Housing Portfolio Channel of QE Transmission

77 Pages Posted: 19 Mar 2021 Last revised: 22 Apr 2022

See all articles by Dominik Boddin

Dominik Boddin

Deutsche Bundesbank - Deutsche Bundesbank Research Data and Service Centre

Daniel te Kaat

University of Groningen

Chang Ma

Fudan University - Fanhai International School of Finance (FISF)

Alessandro Rebucci

Johns Hopkins University - Carey Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: February 9, 2021

Abstract

We propose a household housing portfolio channel of quantitative easing (QE) transmission. QE induces households to rebalance portfolios from bonds to houses, lowering their expected future returns and thus stimulating consumption and output. We document this channel using both regional and household-level data in Germany in the context of a housing boom without credit boom. We show that, at the regional level, QE raises output growth more in regions in which land is scarcer, through lower rental yields. At the household level, following QE, wealthier households rebalance their portfolios toward housing and consume more. The household portfolio rebalancing that we document is stronger when we focus on purchases of second homes, consistent with a buy-to-let motive.

Keywords: Asset Market Segmentation, Buy-to-let, Germany, Housing Returns, Portfolio Rebalancing, Quantitative Easing, Rental Yields

JEL Classification: E3, E4, E5, R3

Suggested Citation

Boddin, Dominik and te Kaat, Daniel and Ma, Chang and Rebucci, Alessandro, A Household Housing Portfolio Channel of QE Transmission (February 9, 2021). Available at SSRN: https://ssrn.com/abstract=3782131 or http://dx.doi.org/10.2139/ssrn.3782131

Dominik Boddin

Deutsche Bundesbank - Deutsche Bundesbank Research Data and Service Centre ( email )

Wilhelm-Epstein-Stra├če 14
Frankfurt am Main, 60431
Germany

Daniel Te Kaat

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

Chang Ma (Contact Author)

Fudan University - Fanhai International School of Finance (FISF) ( email )

China

Alessandro Rebucci

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

HOME PAGE: http://carey.jhu.edu/faculty-research/faculty-directory/alessandro-rebucci-phd

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
27
Abstract Views
1,057
PlumX Metrics