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Microeconomic analysis of household expenditures and their relationship with house prices

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  • Mark Smith

    (Reserve Bank of New Zealand)

Abstract

The use of microeconomic data sources can provide important insights into how household and firm behaviour influence developments in the economy. This article summarises some of the key features of household surveys produced by Statistics New Zealand, including the Household Economic Survey (HES). It then outlines recent work by the Reserve Bank that uses data from the HES to analyse various hypotheses for why a positive correlation exists between house prices and consumer spending. Findings suggest this positive correlation is evident for various age groups of householders, and for households living in rented accommodation as well as for owner-occupiers. There is some evidence of a wealth effect for older householders, with the pick-up in household expenditures for this group since the late 1990s occurring during a period of sizeable house price rises.

Suggested Citation

  • Mark Smith, 2007. "Microeconomic analysis of household expenditures and their relationship with house prices," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 70, December.
  • Handle: RePEc:nzb:nzbbul:december2007:4
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    File URL: http://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletins/2007/2007dec70-4smith.pdf
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    Cited by:

    1. Atalay, Kadir & Whelan, Stephen & Yates, Judith, 2013. "Housing Wealth and Household Consumption: New Evidence from Australia and Canada," Working Papers 2013-04, University of Sydney, School of Economics.
    2. Christopher Ball & Michael Ryan, 2013. "New Zealand Households and the 2008/09 Recession," Treasury Working Paper Series 13/05, New Zealand Treasury.

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