An aggregate economy with different size houses

José Víctor Ríos-Rull, Virginia Sánchez-Marcos

Research output: Contribution to journalArticlepeer-review

28 Scopus citations


We build an aggregate model with different size houses and liquid assets. Typical households are born, are subject to idiosyncratic earnings risk, and save for both life-cycle reasons and housing reasons. Typically, a subset of these households, after accumulating some assets, make a down payment and buy a small starter's house or flat. As time passes, some households upgrade to a larger and nicer house. Households with houses may also eventually downgrade to a flat or even to no house and flat owners may sell. Our specification attempts to replicate some important features of modern aggregate economies: The distribution of earnings and of housing and non-housing wealth as well as some macroeconomic aggregates, including features of the mortgage issuing sector.

Original languageEnglish (US)
Pages (from-to)705-714
Number of pages10
JournalJournal of the European Economic Association
Issue number2-3
StatePublished - Apr 2008


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