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Comparing Wealth Effects: The Stock Market versus the Housing Market

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Abstract

We examine the link between increases in housing wealth, financial wealth, and consumer spending. We rely upon a panel of 14 countries observed annually for various periods during the past 25 years and a panel of U.S. states observed quarterly during the 1980s and 1990s. We impute the aggregate value of owner-occupied housing, the value of financial assets, and measures of aggregate consumption for each of the geographic units over time. We estimate regressions relating consumption to income and wealth measures, finding a statistically significant and rather large effect of housing wealth upon household consumption.

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File URL: http://cowles.econ.yale.edu/P/cd/d13a/d1335.pdf
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Bibliographic Info

Paper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1335.

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Length: 25 pages
Date of creation: Oct 2001
Date of revision:
Publication status: Published in Advances in Macroeconomics (2005) 5(1): 1–34
Handle: RePEc:cwl:cwldpp:1335

Note: CFP 1055.
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Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Phone: (203) 432-3702
Fax: (203) 432-6167
Web page: http://cowles.econ.yale.edu/
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

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Keywords: Consumption; nonfinancial wealth; housing market; real estate;

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