Franjo, Luis, Lambertini, Luisa, Stepanchuk, Serhiy
Growth, Housing, and Global Imbalances
International Economic Review. 2024, 65(2): 623-654. https://doi.org/10.1111/iere.12674
URI: http://hdl.handle.net/10045/138144
DOI: 10.1111/iere.12674
ISSN: 0020-6598 (Print)
Abstract: 
In the decade leading to the Great Recession, the United States experienced rising house prices and current account deficits, whereas China and other fast-growing Asian economies saw rising house prices accompanied by current account surpluses. To explain these differences, we study a transition path in a two-country life-cycle model with housing once the two economies become financially integrated. We allow for asymmetries in productivity growth, the loan-to-value ratio, the life-cycle wage profile, and the population structure across countries. Our findings highlight that differences in the life-cycle pattern of the wage income profile are key to obtaining our results.
Keywords:Growth, Housing, Life-cycle model, Wage income profile
Wiley Periodicals
info:eu-repo/semantics/article