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Consumption Dynamics and a Home Purchase

Author

Listed:
  • Dongjae Jung

    (Economic Research Institute, Bank of Korea)

Abstract

This paper investigates the effects of a home purchase, which is one type of durable expenditure, on changes in non-durable consumption at the household level. The results suggest that there is a break on the consumption path at the time of a home purchase; non-durable consumption in the after-period of a home purchase is 5.2% higher than the before-period. The results propose an extra path that connects the two cycles of housing markets and consumption by suggesting that home purchases trigger not only additional home-related durable spendings, but also release delayed consumption.

Suggested Citation

  • Dongjae Jung, 2020. "Consumption Dynamics and a Home Purchase," Working Papers 2020-27, Economic Research Institute, Bank of Korea.
    • Handle: RePEc:bok:wpaper:2027
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    File URL: https://www.bok.or.kr/ucms/cmmn/file/fileDown.do?menuNo=500789&atchFileId=FILE_000000000020872&fileSn=1
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    References listed on IDEAS

    as
    1. Michael Carlos Best & Henrik Jacobsen Kleven, 2018. "Housing Market Responses to Transaction Taxes: Evidence From Notches and Stimulus in the U.K," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(1), pages 157-193.
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    3. Orazio P. Attanasio, 2000. "Consumer Durables and Inertial Behaviour: Estimation and Aggregation of (S, s) Rules for Automobile Purchases," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 667-696.
    4. Krumm, Ronald & Kelly, Austin, 1989. "Effects of homeownership on household savings," Journal of Urban Economics, Elsevier, vol. 26(3), pages 281-294, November.
    5. Jappelli, Tullio & Pistaferri, Luigi, 2017. "The Economics of Consumption: Theory and Evidence," OUP Catalogue, Oxford University Press, number 9780199383153.
    6. Efraim Benmelech & Adam Guren & Brian T. Melzer, 2017. "Making the House a Home: The Stimulative Effect of Home Purchases on Consumption and Investment," NBER Working Papers 23570, National Bureau of Economic Research, Inc.
    7. Ben Jann, 2014. "Plotting regression coefficients and other estimates," Stata Journal, StataCorp LP, vol. 14(4), pages 708-737, December.
    8. Artle, Roland & Varaiya, Pravin, 1978. "Life cycle consumption and homeownership," Journal of Economic Theory, Elsevier, vol. 18(1), pages 38-58, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Consumption; Home Purchase;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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