Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
Models in the infinite horizon macro‐housing literature often assume that borrowers are constrained exclusively by the loan‐to‐value (LTV) ratio. Motivated by the Swedish microdata, I explore an alternative arrangement where borrowers are constrained by a collateral constraint and by a debt‐service‐to‐income ratio. While stricter LTV limits are often considered as a measure to tackle the rise in household indebtedness, I find that policy designed to lower the maximum permissible LTV ratio may actually leave the debt‐to‐GDP ratio unchanged and increase housing prices in equilibrium if borrowers are bound by two constraints at the same time.