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Comparing Wealth Effects: The Stock Market Versus the Housing Market

  • Karl E. Case
  • Robert J. Shiller
  • John M. Quigley

We examine the link between increases in housing wealth, financial wealth, and consumer spending. We rely upon a panel of 14 countries observed annually for various periods during the past 25 years and a panel of U.S. states observed quarterly during the 1980s and 1990s. We impute the aggregate value of owner-occupied housing, the value of financial assets, and measures of aggregate consumption for each of the geographic units over time. We estimate regressions relating consumption to income and wealth measures, finding a statistically significant and rather large effect of housing wealth upon household consumption.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8606.

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Date of creation: Nov 2001
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Publication status: published as Karl Case & John Quigley & Robert Shiller, 2005. "Comparing Wealth Effects: The Stock Market versus the Housing Market," Advances in Macroeconomics, Berkeley Electronic Press, vol. 5(1), pages 1235-1235.
Handle: RePEc:nbr:nberwo:8606
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