Advanced Search
MyIDEAS: Login to save this paper or follow this series

Non-Durable Consumption and Real-Estate Prices in Brazil: Panel-Data Analysis at the State Level

Contents:

Author Info

  • Dias, Victor Pina
  • Diniz, Érica
  • Issler, João Victor

Abstract

Housing is an important component of wealth for a typical household in manycountries. The objective of this paper is to investigate the effect of real-estate pricevariation on welfare, trying to close a gap between the welfare literature in Braziland that in the U.S., the U.K., and other developed countries. Our first motivationrelates to the fact that real estate is probably more important here than elsewhere asa proportion of wealth, which potentially makes the impact of a price change biggerhere. Our second motivation relates to the fact that real-estate prices boomed inBrazil in the last five years. Prime real estate in Rio de Janeiro and São Paulohave tripled in value in that period, and a smaller but generalized increase has beenobserved throughout the country. Third, we have also seen a recent consumptionboom in Brazil in the last five years. Indeed, the recent rise of some of the poor tomiddle-income status is well documented not only for Brazil but for other emergingcountries as well. Regarding consumption and real-estate prices in Brazil, one cannotimply causality from correlation, but one can do causal inference with an appropriatestructural model and proper inference, or with a proper inference in a reduced-formsetup. Our last motivation is related to the complete absence of studies of this kindin Brazil, which makes ours a pioneering study.We assemble a panel-data set for the determinants of non-durable consumptiongrowth by Brazilian states, merging the techniques and ideas in Campbell and Cocco(2007) and in Case, Quigley and Shiller (2005). With appropriate controls, and panel-data methods, we investigate whether house-price variation has a positive effect on non-durable consumption. The results show a non-negligible significant impact ofthe change in the price of real estate on welfare (consumption), although smaller thenwhat Campbell and Cocco have found. Our findings support the view that the channelthrough which house prices affect consumption is a financial one.

Download Info

If 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.
File URL: http://bibliotecadigital.fgv.br/dspace/bitstream/10438/10713/7/Non-Durable-Consumption-and-Real-Estate-Prices-in-Brazil-Panel-Data-Analysis-at-the-State-Level.pdf
Download Restriction: no

Bibliographic Info

Paper provided by FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil) in its series Economics Working Papers (Ensaios Economicos da EPGE) with number 739.

as in new window
Length:
Date of creation: 05 Apr 2013
Date of revision:
Handle: RePEc:fgv:epgewp:739

Contact details of provider:
Postal: Praia de Botafogo 190, sala 1100, Rio de Janeiro/RJ - CEP: 22253-900
Phone: 55-21-2559-5871
Fax: 55-21-2553-8821
Email:
Web page: http://epge.fgv.br
More information through EDIRC

Related research

Keywords:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. David Laibson & Johanna Mollerstrom, 2010. "Capital Flows, Consumption Booms and Asset Bubbles: A Behavioural Alternative to the Savings Glut Hypothesis," Economic Journal, Royal Economic Society, vol. 120(544), pages 354-374, 05.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:fgv:epgewp:739. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Núcleo de Computação da EPGE).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.