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House Prices and Consumer Spending




Flood, Morin, and Kolet examine the role of house prices in household consumption decisions. Considering a group of advanced economies, the authors find that the strength of the link between house prices and consumer spending depends on the institutional features of national mortgage markets. The link between house prices and consumer spending is found to be stronger in countries with more-developed mortgage markets characterized by lower down payment ratios, increased availability of home-equity borrowing products, longer average mortgage terms, and a higher degree of mortgage securitization. Their findings also suggest that the liberalization of mortgage markets since the early 1980s has resulted in a stronger link between house prices and consumer spending.

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  • Kimberly Flood & Sylvie Morin & Ilan Kolet, 2008. "House Prices and Consumer Spending," Bank of Canada Review, Bank of Canada, vol. 2008(Summer), pages 33-46.
  • Handle: RePEc:bca:bcarev:v:2008:y:2008:i:summer08:p:33-46

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    References listed on IDEAS

    1. Macdonald, Ryan, 2007. "Canadian and U.S. Real Income Growth Pre and Post 2000: A Reversal of Fortunes," Economic Analysis (EA) Research Paper Series 2007048e, Statistics Canada, Analytical Studies Branch.
    2. Fagerberg, Jan, 2000. "Technological progress, structural change and productivity growth: a comparative study," Structural Change and Economic Dynamics, Elsevier, vol. 11(4), pages 393-411, December.
    3. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
    4. Jeannine Bailliu & Michael R. King, 2005. "What Drives Movements in Exchange Rates?," Bank of Canada Review, Bank of Canada, vol. 2005(Autumn), pages 27-39.
    5. Robert Lafrance & Lawrence L. Schembri, 2000. "The Exchange Rate, Productivity, and the Standard of Living," Bank of Canada Review, Bank of Canada, vol. 1999(Winter), pages 17-28.
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    Cited by:

    1. van Holle, Frederiek, 2017. "Essays in empirical finance and monetary policy," Other publications TiSEM 30d11a4b-7bc9-4c81-ad24-5, Tilburg University, School of Economics and Management.

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