House Price Shocks, Negative Equity and Household Consumption in the UK in the 1990s
AbstractWe examine the impact of housing capital gains on savings behaviour during the 1990s British housing market cycle using microdata from the British Household Panel Survey and county-level house price data. We condition the models on household real financial capital gains using Family Resources Survey data. We find a marginal propensity to consume out of housing wealth of between 0.01 and 0.03, depending on specification. Among our novel findings are asymmetric behaviour between periods of house price rises and falls, with stronger consumption response during periods of house price increases, and a disproportionate impact on saving if the household has negative housing equity.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 64.
Date of creation: 29 Aug 2002
Date of revision:
Contact details of provider:
Postal: Office of the Secretary-General, School of Economics and Finance, University of St. Andrews, St. Andrews, Fife, KY16 9AL, UK
Phone: +44 1334 462479
Web page: http://www.res.org.uk/society/annualconf.asp
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-07-08 (All new papers)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Bover, Olympia, 2006. "Wealth Effects on Consumption: Microeconometric Estimates from a New Survey of Household Finances," CEPR Discussion Papers 5874, C.E.P.R. Discussion Papers.
- Eva Sierminska & Yelena Takhtamanova, 2007. "Wealth effects out of financial and housing wealth: cross country and age group comparisons," Working Paper Series 2007-01, Federal Reserve Bank of San Francisco.
- Richard Disney & Sarah Bridges & John Gathergood, .
"Housing Wealth and Household Indebtedness: Is there a Household ‘Financial Accelerator’?,"
06/01, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
- Richard Disney & Sarah Bridges & John Gathergood, 2006. "Housing Wealth and Household Indebtedness: Is there a Household 'Financial Accelerator'?," Working Papers 2006/12, Czech National Bank, Research Department.
- Robert-Paul Berben & Kerstin Bernoth & Mauro Mastrogiacomo, 2007.
"Households' response to wealth changes: do gins or losses make a difference?,"
IFC Bulletins chapters,
in: Bank for International Settlements (ed.), Proceedings of the IFC Conference on "Measuring the financial position of the household sector", Basel, 30-31 August 2006 - Volume 1, volume 25, pages 145-160
Bank for International Settlements.
- Robert Paul Berben & Kerstin Bernoth & Mauro Mastrogiacomo, 2006. "Households' Response to Wealth Changes: Do Gains or Losses make a Difference?," DNB Working Papers 090, Netherlands Central Bank, Research Department.
- Mauro Mastrogiacomo & R.P. Berben & K. Bernoth, 2006. "Households' response to wealth changes; do gains or losses make a difference," CPB Discussion Paper 63, CPB Netherlands Bureau for Economic Policy Analysis.
- Christopher D. Carroll & Misuzu Otsuka & Jirka Slacalek, 2006.
"How Large Is the Housing Wealth Effect? A New Approach,"
Economics Working Paper Archive
535, The Johns Hopkins University,Department of Economics.
- Carroll, Christopher D. & Otsuka, Misuzu & Slacalek, Jirka, 2006. "How large is the housing wealth effect? A new approach," CFS Working Paper Series 2006/35, Center for Financial Studies (CFS).
- Christopher D. Carroll & Misuzu Otsuka & Jirka Slacalek, 2006. "How Large Is the Housing Wealth Effect? A New Approach," NBER Working Papers 12746, National Bureau of Economic Research, Inc.
- Márquez, Elena & Martínez-Cañete, Ana R. & Pérez-Soba, Inés, 2013. "Wealth shocks, credit conditions and asymmetric consumption response: Empirical evidence for the UK," Economic Modelling, Elsevier, vol. 33(C), pages 357-366.
- Luigi Guiso & Monica Paiella & Ignazio Visco, 2005. "Do capital gains affect consumption? Estimates of wealth effects from Italian householdsÂ’ behavior," Temi di discussione (Economic working papers) 555, Bank of Italy, Economic Research and International Relations Area.
- Helmut Rainer & Ian Smith, 2008.
"Staying Together for the Sake of the Home? House Price Shocks and Partnership Dissolution in the UK,"
Discussion Paper Series, Department of Economics
200809, Department of Economics, University of St. Andrews.
- Helmut Rainer & Ian Smith, 2010. "Staying together for the sake of the home?: house price shocks and partnership dissolution in the UK," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 173(3), pages 557-574.
- Hong Kong Monetary Authority, 2008. "The housing market channel of the monetary transmission mechanism in Hong Kong," BIS Papers chapters, in: Bank for International Settlements (ed.), Transmission mechanisms for monetary policy in emerging market economies, volume 35, pages 221-234 Bank for International Settlements.
- Olympia Bover, 2005. "Wealth effects on consumption: microeconometric estimates from the Spanish survey of household finances," Banco de Espaï¿½a Working Papers 0522, Banco de Espa�a.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If references are entirely missing, you can add them using this form.