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The effect of housing and stock market wealth on consumption in emerging and developed countries

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  • Ahec Šonje, Amina
  • Čeh Časni, Anita
  • Vizek, Maruška

Abstract

This study examines the long- and short-run relationship between private consumption, housing wealth, stock market wealth and income. In order to asses this relationship empirically, we use pooled mean group estimators of dynamic heterogeneous panel data on a sample of 30 developed and emerging economies. The sample countries are segmented into three separate panels: a developed bank-based panel, a developed market-based panel, and an emerging bank-based panel. Empirical estimates support the existence of long- and short-run stock market wealth effects in both groups of developed countries, with the effect being particularly strong in the developed market-based countries. A moderate long-run housing wealth effect is confirmed only for the developed bank-based countries, while a very strong short-run housing wealth effect is present in the developed market-based countries. As far as the emerging countries are concerned, the evidence is somewhat inconclusive, but it does seem to suggest that both wealth effects are effective in the long run, with housing wealth being more dominant.

Suggested Citation

  • Ahec Šonje, Amina & Čeh Časni, Anita & Vizek, Maruška, 2014. "The effect of housing and stock market wealth on consumption in emerging and developed countries," Economic Systems, Elsevier, vol. 38(3), pages 433-450.
  • Handle: RePEc:eee:ecosys:v:38:y:2014:i:3:p:433-450
    DOI: 10.1016/j.ecosys.2014.03.001
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    Cited by:

    1. Anita Ceh Casni, 2017. "Importance of housing wealth effect in selected European countries: evidence from panel VAR model," ERES eres2017_138, European Real Estate Society (ERES).
    2. repec:taf:rjapxx:v:21:y:2016:i:2:p:196-216 is not listed on IDEAS
    3. Barrell, Ray & Costantini, Mauro & Meco, Iris, 2015. "Housing wealth, financial wealth, and consumption: New evidence for Italy and the UK," International Review of Financial Analysis, Elsevier, vol. 42(C), pages 316-323.
    4. repec:vrs:ngooec:v:62:y:2016:i:4:p:23-32:n:3 is not listed on IDEAS
    5. repec:seb:journl:v:15:y:2017:i:1:p:63-86 is not listed on IDEAS

    More about this item

    Keywords

    Private consumption; Wealth; Panel cointegration; Emerging economies;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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