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Non-durable Consumption and Housing Net Worth in the Great Recession: Evidence from Easily Accessible Data

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  • Kaplan, Greg
  • Mitman, Kurt
  • Violante, Giovanni L.

Abstract

In an influential paper, Mian, Rao and Sufi (2013) exploit geographic variation in housing supply elasticities to measure the effect of changes in the housing share of net worth on total household expenditures during the Great Recession. Their widely-cited estimates are based on proprietary house price data, and use new vehicle registrations as the main proxy for total spending. We revisit their study using different, publicly available data on house prices, and an easily-accessible proxy for expenditures in non-durable goods. We re-affirm their findings in our data, and refine their analysis in several dimensions: (i) we separate the roles of falling house prices and initial leverage; (ii) we distinguish the effects on real consumption versus nominal expenditures; and (iii) we infer the implied elasticity of total non-durable expenditures in goods and services to housing net worth.

Suggested Citation

  • Kaplan, Greg & Mitman, Kurt & Violante, Giovanni L., 2016. "Non-durable Consumption and Housing Net Worth in the Great Recession: Evidence from Easily Accessible Data," CEPR Discussion Papers 11255, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11255
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    References listed on IDEAS

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    1. repec:ucp:jpolec:doi:10.1086/701422 is not listed on IDEAS
    2. Aaron Hedlund, 2014. "The Cyclical Dynamics of Illiquid Housing, Debt, and Foreclosures," Working Papers 1416, Department of Economics, University of Missouri.
    3. Johannes Stroebel & Joseph Vavra, 2019. "House Prices, Local Demand, and Retail Prices," Journal of Political Economy, University of Chicago Press, vol. 127(3), pages 1391-1436.
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    More about this item

    Keywords

    Consumption; great recession; House Prices; Non-durable expenditures;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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