Real Estate Versus Financial Wealth in Consumption

Benjamin, John D.; Chinloy, Peter; Jud, G. Donald

doi:10.1023/b:real.0000036677.42950.98

Cited by 191 publications

(142 citation statements)

References 17 publications

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“…Empirically, numerous studies document significant and positive wealth effects on US consumption, with a large consensus that the housing wealth effect exceeds that coming from stock market wealth (e.g., Benjamin et al 2004;Case et al 2005;Carrol et al 2006;Dvornak and Kohler 2007;and Kishor 2007). Sousa (2008) points out, however, that the magnitude of the wealth effect depends not only on the wealth measures, but also on the econometric methodologies employed in the analysis.…”

Section: Introductionmentioning

confidence: 99%

“…For the US, Wilkerson and Williams (2011) note that the limited use of stock market wealth for consumption may reflect capital gains taxes on stocks as well as the inaccessibility, except at a cost, of a sizeable share of stock wealth held in restricted retirement or pension accounts. That is, Benjamin et al (2004) note that for many households, they hold financial wealth indirectly through pensions and insurance. Moreover, tax policy favours home ownership and the concentration of wealth in homes.…”

Section: Introductionmentioning

confidence: 99%

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Time-Varying Effects of Housing and Stock Returns on U.S. Consumption

Simo-Kengne

Miller

Gupta

et al. 2014

J Real Estate Finan Econ

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Abstract. This paper applies a time-varying parameter vector autoregressive approach to estimate the relative effects of housing and stock returns on the growth rate of US consumption over time. We use annual data from 1890 to 2012 and find that at the one-and two-year horizons and over time, generally the housing return positively affects consumption growth while the stock return negatively affects it. For the three-to six-year horizons, the two return shocks generally exert a negative, but small, effect on consumption growth. These opposite responses to changes in housing and stock returns suggest different mechanisms through which wealth affects consumption. Further, the housing return effect generally increases after 1980. The sub-period from 1980 to 2012 includes the 1997/2002 asset price boom/bust where house prices continued to rise moderately as stock prices fell. These findings suggest that the magnitude of the relative return effects differs with both time and horizons and also depends on whether prices increase or decrease.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Time-Varying Effects of Housing and Stock Returns on U.S. Consumption

Simo-Kengne

Miller

Gupta

et al. 2014

J Real Estate Finan Econ

View full text Add to dashboard Cite

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“…Residential investment is a relatively small but volatile component of GDP. Significant wealth or collateral effects on private consumption have been evidenced in many countries, even though they are less powerful in euro area countries than in English-speaking countries, with the exception of the Netherlands (Benjamin et al, 2004;Catte et al, 2004;Lettau and Ludvigson, 2004;Ludwig and Slok, 2004;Case et al, 2005;Campbell and Cocco, 2007;Muellbauer and Murphy, 2008). Other authors have used Structural Vector AutoRegressive (SVAR) models to demonstrate interactions between housing prices and the wider economy (Goodhart and Hofmann, 2008;Jarocinski and Smets, 2008;Iacoviello and Neri, 2010;Musso et al, 2011;André et al, 2012).…”

Section: Introductionmentioning

confidence: 99%

Comovement in Euro area housing prices: A fractional cointegration approach

2014

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This paper analyses comovement in housing prices across the euro area. We use techniques based on the concepts of fractional integration and cointegration. Our results indicate that all the individual log-real price indices display orders of integration which are above one, implying long memory in their corresponding growth rates. Further, looking at the cointegration relationships, we observe that the series for the euro area is cointegrated with those of Belgium, Germany and France. Focussing on the individual countries, we find cointegration relationships between Belgium and Spain, Belgium and the Netherlands, Germany and Spain, Germany and Ireland, France and Spain and Ireland and the Netherlands. Other bilateral cointegration relationships can either clearly be rejected or the results are ambiguous. Finally, prices in Germany seem to move in the opposite direction from other countries, which may be related to capital flows associated with current account imbalances.

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“…Goodhart and Hofmann (2008) believe that monetary variables and housing price can significantly affect GDP growth. Benjamin (2004), Kishor (2007) and Campbell and Cocco (2007) believe that housing price can affect consumption through the wealth effect, and thus have an impact on GDP. When real estate price rise, developers will gain more and they will build more houses, it will promote real estate investment and push gross fixed capital formation.…”

Section: Endogeneity and Instrumental Variablesmentioning

confidence: 99%

Household Debt and Housing Price: An Empirical Study across 36 Countries

Lai¹,

Chan²,

Shum³

et al. 2017

IJBM

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This paper investigates the effect of the change of household debt ratio (household debt to GDP) on national housing price by using unbalanced panel data in 36 countries during 1981-2015. We employ Two Stage Least Square and GMM method to analyze the fixed effect model, after controlling the demand, supply, other assets prices and endogeneity. Our findings are that household debt ratio and housing price are positively significantly related. Household debt ratio promotes the growth rate of housing prices. The findings remain robust by separating countries into two groups, European countries and non-European countries, and using nominal housing price as explanatory variable.

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Real Estate Versus Financial Wealth in Consumption

Cited by 191 publications

References 17 publications

Time-Varying Effects of Housing and Stock Returns on U.S. Consumption

Time-Varying Effects of Housing and Stock Returns on U.S. Consumption

Comovement in Euro area housing prices: A fractional cointegration approach

Household Debt and Housing Price: An Empirical Study across 36 Countries

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