Owner-Occupied Housing and the Composition of the Household Portfolio

  title={Owner-Occupied Housing and the Composition of the Household Portfolio},
  author={Marjorie A. Flavin},
The paper studies the impact of the portfolio constraint imposed by the consumption demand for housing (the “housing constraint”) on the household’s optimal holdings of financial assets. Since the ratio of housing to net worth declines as the household accumulates wealth, the housing constraint induces a life-cycle pattern in the portfolio shares of stocks and bonds. For reasonable degrees of risk aversion, the changes in portfolio composition over the life-cycle can be dramatic. For example… CONTINUE READING
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