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Housing wealth effect: Evidence from threshold estimation

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  • Khalifa, Sherif
  • Seck, Ousmane
  • Tobing, Elwin

Abstract

This paper attempts to estimate the housing wealth effect of households in different income levels. To endogenously split the sample by income levels, we use the threshold estimation technique, developed in Hansen (1999), for non-dynamic panels with individual-specific fixed effects. The data are drawn from the Panel Study of Income Dynamics (PSID), during the waves of 2001, 2003, and 2005. We find two significant threshold income levels of $74,046, and $501,000. Housing wealth has a significant effect on consumption with a coefficient of 0.010602, if income is below $74,046. It is also significant and equals 0.028224 if income is between $74,046 and $501,000. For incomes above $501,000, the coefficient is not statistically significant.

Suggested Citation

  • Khalifa, Sherif & Seck, Ousmane & Tobing, Elwin, 2013. "Housing wealth effect: Evidence from threshold estimation," Journal of Housing Economics, Elsevier, vol. 22(1), pages 25-35.
  • Handle: RePEc:eee:jhouse:v:22:y:2013:i:1:p:25-35
    DOI: 10.1016/j.jhe.2012.08.004
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    References listed on IDEAS

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    1. Benítez-Silva, Hugo & Eren, Selçuk & Heiland, Frank & Jiménez-Martín, Sergi, 2015. "How well do individuals predict the selling prices of their homes?," Journal of Housing Economics, Elsevier, vol. 29(C), pages 12-25.
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    1. repec:ire:issued:v:22:n:01:2019:p:61-84 is not listed on IDEAS
    2. Benítez-Silva, Hugo & Eren, Selçuk & Heiland, Frank & Jiménez-Martín, Sergi, 2015. "How well do individuals predict the selling prices of their homes?," Journal of Housing Economics, Elsevier, vol. 29(C), pages 12-25.
    3. Hassan Gholipour Fereidouni & Reza Tajaddini, 2017. "Housing Wealth, Financial Wealth and Consumption Expenditure: The Role of Consumer Confidence," The Journal of Real Estate Finance and Economics, Springer, vol. 54(2), pages 216-236, February.
    4. repec:spt:apfiba:v:8:y:2018:i:6:f:8_6_8 is not listed on IDEAS
    5. repec:ire:issued:v:22:n:01:2019:p:59-81 is not listed on IDEAS

    More about this item

    Keywords

    Wealth effects; Threshold estimation;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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