ARTICLE
Rent or Buy? Inflation Experiences and Homeownership within and across Countries
ULRIKE MALMENDIER,
ALEXANDRA STEINY WELLSJO,
ULRIKE MALMENDIER
Search for more papers by this authorCorresponding Author
ALEXANDRA STEINY WELLSJO
Ulrike Malmendier is with the Department of Economics and Haas School of Business, University of California Berkeley, NBER, and CEPR. Alexandra Steiny Wellsjo is with the Rady School of Management, University of California San Diego. The authors thank Wei Xiong (the Editor), an anonymous Associate Editor, and two anonymous referees for thoughtful comments. We thank Nikki Azerang, Karin Li, and Allen Chen for excellent research assistance. We also thank Victor Couture; Anthony De Fusco; Amir Kermani; Herve Le Bihan; Charles Nathanson; Nick Sander; Nancy Wallace; and workshop participants at Berkeley, Chicago, Duke, Stanford, New York Federal Reserve Bank; as well as the AEA, Finish Economic Association, ESA conferences, the Household and Behavioral Finance Symposium at Cornell conference, the CEPR Network Event on Household Finance, the BdF/ECB Conference on Household Finance and Consumption, and the UCSD Spring School in Behavioral Economics for helpful comments. We thank Luisa Cefala, Pablo Munoz Henriquez, and Murilo Ramos for help with translations. This paper uses data from the Eurosystem Household Finance and Consumption Survey, the American Community Survey (from IPUMS), and the Survey of Health, Ageing and Retirement in Europe. We have read The Journal of Finance disclosure policy and have no conflicts of interest to disclose.Correspondence: Alexandra Steiny Wellsjo, Rady School of Management, University of California San Diego, 10065 Scholars Drive North, La Jolla, CA 92093-0553; e-mail: awellsjo@ucsd.edu.
Search for more papers by this authorULRIKE MALMENDIER,
ALEXANDRA STEINY WELLSJO,
ULRIKE MALMENDIER
Search for more papers by this authorCorresponding Author
ALEXANDRA STEINY WELLSJO
Ulrike Malmendier is with the Department of Economics and Haas School of Business, University of California Berkeley, NBER, and CEPR. Alexandra Steiny Wellsjo is with the Rady School of Management, University of California San Diego. The authors thank Wei Xiong (the Editor), an anonymous Associate Editor, and two anonymous referees for thoughtful comments. We thank Nikki Azerang, Karin Li, and Allen Chen for excellent research assistance. We also thank Victor Couture; Anthony De Fusco; Amir Kermani; Herve Le Bihan; Charles Nathanson; Nick Sander; Nancy Wallace; and workshop participants at Berkeley, Chicago, Duke, Stanford, New York Federal Reserve Bank; as well as the AEA, Finish Economic Association, ESA conferences, the Household and Behavioral Finance Symposium at Cornell conference, the CEPR Network Event on Household Finance, the BdF/ECB Conference on Household Finance and Consumption, and the UCSD Spring School in Behavioral Economics for helpful comments. We thank Luisa Cefala, Pablo Munoz Henriquez, and Murilo Ramos for help with translations. This paper uses data from the Eurosystem Household Finance and Consumption Survey, the American Community Survey (from IPUMS), and the Survey of Health, Ageing and Retirement in Europe. We have read The Journal of Finance disclosure policy and have no conflicts of interest to disclose.Correspondence: Alexandra Steiny Wellsjo, Rady School of Management, University of California San Diego, 10065 Scholars Drive North, La Jolla, CA 92093-0553; e-mail: awellsjo@ucsd.edu.
Search for more papers by this authorABSTRACT
We show that past inflation experiences strongly predict homeownership within and across countries. First, we collect novel survey data, which reveal inflation protection to be a key motivation for homeownership, especially after high inflation experiences. Second, using household data from 22 European countries, we find that higher exposure to historical inflation predicts higher homeownership rates. We estimate similar associations among immigrants to the United States who experienced different past inflation in their home countries but face the same U.S. housing market. Consistent with the experience effects model, the relationship is strongest in countries with predominantly fixed-rate mortgages.
Supporting Information
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| jofi13332-sup-0001-InternetAppendix.pdf2.1 MB | Appendix S1: Internet Appendix. |
| jofi13332-sup-0002-ReplicationCode.zip13.3 MB | Replication Code. |
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