DEFINE-HOUSING is a simplified model that captures the role of housing in the green transition. Its first version, DEFINE-HOUSING 1.0, comprises households, firms, commercial banks, a government sector and a central bank. The model distinguishes between two types of households: worker households and investor households (rentiers). Worker households receive their wage income from firms, have deposits and take out mortgages to buy a house. The housing loans can be green or conventional, depending on whether they are used to buy green houses or conventional houses, respectively.

Green houses are houses that are characterised by low carbon intensity due to high energy efficiency and the use of renewables/electricity for heating. Worker households receive only a proportion of green and conventional housing loans that they demand (i.e. there is quantity credit rationing in the model). At the aggregate level, some of the worker households are not able to buy a house, so they end up renting a house and paying rent. Investor households receive distributed profits from firms and banks, interest on deposits and interest on government securities.

Investor households also own houses that are available for sale or rent: some of these houses are sold to worker households, and some other houses are rented to workers. Investor households finance their housing purchases based on their wealth and buy both energy-efficient houses and conventional houses constructed by firms.

The DEFINE-HOUSING 2.0 model extends DEFINE-HOUSING 1.0 by incorporating green securitisation and shadow banking sectors into the structure of the financial system. This permits the combined analysis of green housing and green securitisation dynamics and the study of the macrofinancial and environmental effects of a wider range of green financial policies. The economy of DEFINE-HOUSING 2.0 consists of nine sectors: worker households, investor (rentier) households, firms, commercial banks, Finance Vehicle Corporations (FVCs), Investment Funds (IFs), Money Market Funds (MMFs), the government sector and the central bank.

Manual

Version	Date	Description
DEFINE-HOUSING 2.0	April 2026	DEFINE-HOUSING 1.0 + Securitisation
DEFINE-HOUSING 1.0	April 2026	First version of DEFINE-HOUSING