|Mathias Hoffmann is Professor of Economics at the University of Zurich. His research focuses on the macroeconomic aspects of international financial integration and on the link between financial markets and the macro-economy more generally. His recent published articles include papers on the determinants of international capital flows and imbalances, the international transmission of business cycles, on international risk sharing and banking regulation. Prior to arriving in Zurich, he was Professor at the University of Dortmund in Germany and a Lecturer at Southampton University (UK). He holds a PhD in Economics from the European University Institute in Florence and obtained his undergraduate education in economics and mathematics at WHU School of Management, Brandeis University and the University of Bonn. Mathias Hoffmann is a fellow of CESifo Munich, the Centre for Applied Macroeconomic Analysis (CAMA) at Australian National University and has held visiting positions, at the University of California at Berkeley, the Deutsche Bundesbank, the Hong Kong Monetary Authority, Keio University and Stanford University.
|This paper studies how access to mortgage credit interacts with a scarcity of safe assets in affecting savings and consumption at the aggregate (city) and the household level in China. We construct a novel measure of the attractiveness of housing as a store of value that is based on fundamental growth expectations in housing prices (FHGE) at the city level. We find that cities with higher FHGE have lower deposit-loan ratios and that this correlation is stronger in cities with many credit-constrained households. Also, renters have a higher propensity to save out of income and again this pattern is stronger in cities with high FHGE. Conversely, house owners have lower consumption volatility conditional on income shocks (better risk sharing) and their level of consumption risk sharing increases with FHGE. We discuss implications of our findings for consumption heterogeneity and a rebalancing of the Chinese economy.|
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