Journal ArticleHousing, Distribution, and WelfareKiyotaki, Nobuhiro; Michaelides, Alex; Nikolov, KalinHousing is a long-lived asset whose value is sensitive to variations in expectations of long-run growth rates and interest rates. When a large fraction of households has leverage, housing price fluctuations cause large-scale redistribution and consumption volatility.We find that a practical way to insure the young and the poor from the housing market fluctuations is through awell-functioning rental market. In practice, homeownership subsidies keep the rental market small and the housing cycle affects aggregate consumption. Removing homeownership subsidies hurts old homeowners, while leverage limits hurt young homeowners.Wiley2024-02-1410512913Journal of money credit and banking0022-2879https://doi.org/10.1111/jmcb.131362215080housing prices, credit constraints, distribution, rental markets, welfareNational Science Foundation