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How May Consumption be Affected by Housing and Financial Assets in China and the Euro Countries?

Author

Listed:
  • Yaowu Yang

    (Business School, Beijing Normal University, No. 19, XinJieKouWai Street, Beijing, China)

  • Chengyu Yang

    (Business School, Beijing Normal University, No. 19, XinJieKouWai Street, Beijing, China)

Abstract

This paper uses samples of household data from Chinese Family Panel Studies (CFPS) and Eurosystem Household Finance and Consumption Survey (HFCS) to estimate the consumption effects of both housing and financial assets. Our results show that components of household wealth have different impacts on consumption. The estimated housing asset elasticity of consumption is larger than financial asset elasticity of consumption both in China and Euro countries. By analyzing the wealth effect of housing in different age groups, we found that the wealth effect of housing and financial assets on consumption is larger for elderly families than for younger families in the Eurozone, but opposite result is obtained in China.

Suggested Citation

  • Yaowu Yang & Chengyu Yang, 2014. "How May Consumption be Affected by Housing and Financial Assets in China and the Euro Countries?," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-20.
    • Handle: RePEc:wsi:ceprxx:v:03:y:2014:i:02:n:s1793969014500113
    DOI: 10.1142/S1793969014500113
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    References listed on IDEAS

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    1. Case Karl E. & Quigley John M. & Shiller Robert J., 2005. "Comparing Wealth Effects: The Stock Market versus the Housing Market," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-34, May.
    2. Campbell, John Y. & Cocco, Joao F., 2007. "How do house prices affect consumption? Evidence from micro data," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 591-621, April.
    3. Nikola Dvornak & Marion Kohler, 2007. "Housing Wealth, Stock Market Wealth and Consumption: A Panel Analysis for Australia," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 117-130, June.
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    More about this item

    Keywords

    Financial assets; housing assets; consumption; wealth effect; C21; D12; E20;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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