A Note On Housing Wealth And Private Consumption
AbstractThis paper analyses the relationship between house prices and private consumption of the US economy. Based on Granger's causality test, we ask whether this relationship is driven by causality or whether it is merely an ambiguous connection. Based on latest quartely data, our results show that there is indeed a causal relationship with changes in house prices affeting private consumption, fundamentally supporting economic theory. Considering existing research, it is therefore suggested that the US economy is at the outset of a severe economic downturn, confirming pessimist's expectations.
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Bibliographic InfoArticle provided by Spiru Haret University, Faculty of Accounting and Financial Management Constanta in its journal Journal of Academic Research in Economics.
Volume (Year): 1 (2009)
Issue (Month): 2 (October) ()
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Web page: http://www2.spiruharet.ro/facultati/facultate.php?id=9
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Wealth effect; House prices; Consumption; Granger causality;
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E26 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
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