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The Impact of a Change in Real Estate Value on Private Consumption in Estonia

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  • Signe Rosenberg

    (Tallinn School of Economics and Business Administration)

Abstract

This paper examines the link between the value of residential real estate stock and private consumption using data from Estonia. Estonia has a high share of owner-occupancy due to the property reform that was begun after regaining independence in 1991, and has also seen large changes in real estate prices. A vector error correction model was constructed with private consumption, real estate stock value, GDP and household debt as the variables. The results suggest the presence of a long-run relationship, showing that changes in the value of residential real estate stock positively affect private consumption in the long run, i.e. the effect is permanent and has the expected positive sign.

Suggested Citation

  • Signe Rosenberg, 2015. "The Impact of a Change in Real Estate Value on Private Consumption in Estonia," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 7(2).
    • Handle: RePEc:ttu:rebcee:78
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    References listed on IDEAS

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