Analyzing the Effects of Financial and Housing Wealth on Consumption using Micro Data PDF Download

Author: Carlos Caceres
Publisher: International Monetary Fund
ISBN: 1498316476
Category : Business & Economics
Languages : en
Pages : 32

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Book Description
This paper analyzes the existence of “wealth effects” derived from net equity (in the form of housing, financial assets, and total net worth) on consumption. The study uses longitudinal household-level data?from the Panel Study of Income Dynamics (PSID) ?covering about 7,000-9,000 households in the U.S., with the estimations carried over the period 1999-2017. Overall, wealth effects are found to be relatively large and significant for housing wealth, but less so for other types of wealth, including stocks. Furthermore, the analysis shows how these estimated marginal propensities to consume (MPC) from wealth are closely linked to household characteristics, including income and demographic factors. Finally, underlying structural changes in household characteristics point to potentially lower aggregate MPCs from wealth going forward.

Author: Seog Jun Song
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 0

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Author: Eric S. Belsky
Publisher:
ISBN:
Category : Consumer behavior
Languages : en
Pages : 62

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Author: Karl E. Case
Publisher:
ISBN:
Category : Assets (Accounting).
Languages : en
Pages : 17

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Book Description
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

Author: Chris Carroll
Publisher:
ISBN:
Category : Consumption (Economics)
Languages : en
Pages : 36

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Book Description
This paper presents a simple new method for estimating the size of 'wealth effects' on aggregate consumption. The method exploits the well-documented sluggishness of consumption growth (often interpreted as 'habits' in the asset pricing literature) to distinguish between short-run and long-run wealth effects. In U.S. data, we estimate that the immediate (next-quarter) marginal propensity to consume from a $1 change in housing wealth is about 2 cents, with a final long-run effect around 9 cents. Consistent with several recent studies, we find a housing wealth effect that is substantially larger than the stock wealth effect. We believe that our approach is preferable to the currently popular cointegration- based estimation methods, because neither theory nor evidence justifies faith in the existence of a stable cointegrating vector.

Author: Arnold C S. Cheng
Publisher:
ISBN:
Category :
Languages : en
Pages : 30

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Book Description
The objective of this study is to examine the financial market and housing wealth effects on consumption. Housing has the dual functions as both a commodity yielding a flow of housing services and an investment asset yielding a flow of capital income. The findings from this study suggest that a rise in housing price has both a positive wealth effect and a negative price effect on consumption. While the positive wealth effect is caused by an increase in capital income, the negative price effect is caused by an increase in the cost of housing services. In addition, the housing market wealth effect increases, at the expense of the price effect, with the levels of leverage and homeownership of the housing market. These findings imply that the government policy of land supply aiming to stimulate the economy should strike a balance between the possible wealth and price effects of the housing market.

Author: Siu Kei Wong
Publisher:
ISBN:
Category :
Languages : en
Pages : 28

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Book Description
This study examines the effect of housing wealth on household consumption when there are resale (including refinancing) constraints that prevent housing assets from being cashed out. Based on household-level expenditure data in Hong Kong, two resale constraints are found to have weakened the housing wealth effect. The first one applies to subsidized homeowners who are not allowed to resell their units before sharing their capital gain with the government. A significant housing wealth effect is found among private homeowners, but not subsidized homeowners. The second one applies to private homeowners whose recourse mortgages go “underwater” - they have to repay the outstanding loan to the bank before they can resell their units. In this case, the housing wealth effect becomes weaker even among private owners. The results remain robust after the application of more rigorous sample selection through propensity score matching.

Author: Karl E. Case
Publisher:
ISBN:
Category : Economics
Languages : en
Pages : 40

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Book Description
We re-examine the link between changes in housing wealth, financial wealth, and consumer spending. We extend a panel of U.S. states observed quarterly during the seventeen-year period, 1982 through 1999, to the thirty-one year period, 1978 through 2009. Using techniques reported previously, 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 regression models in levels, first differences and in error-correction form, relating per capita consumption to per capita income and wealth. We find a statistically significant and rather large effect of housing wealth upon household consumption. This effect is consistently larger than the effect of stock market wealth upon consumption. This reinforces the conclusions reported in our previous analysis. In contrast to our previous analysis, however, we do find - based on data which include the recent volatility in asset markets - that the effects of declines in housing wealth in reducing consumption are at least as large as the effects of increases in housing wealth in increasing the course of household consumption.

Author: Susan J. Smith
Publisher: John Wiley & Sons
ISBN: 9781444317985
Category : Business & Economics
Languages : en
Pages : 648

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Book Description
The Blackwell Companion to the Economics of Housing willhelp students and professionals alike to explore key elements ofthe housing economy: home prices, housing wealth, mortgage debt,and financial risk. Features 24 original essays, including an editorialintroduction and three section overviews Includes 39 world-class authors from a mix of educational andfinancial organizations in the UK, Europe, Australia, and NorthAmerica Broadly-based, scholarly, and accessible, serving students andprofessionals who wish to understand how today’s housingeconomy works Profiles the role and relevance of housing wealth; themismanagement of mortgage debt; and the pitfalls and potential ofhedging housing risk Key topics include: the housing price bubble and crash; thesubprime mortgage crisis in the US and its aftermath; the linksbetween housing wealth, the macroeconomy, and the welfare ofhome-occupiers; the mitigation of credit and housing investmentrisks Specific case studies help to illustrate concepts, along withnew data sets and analyses to illustrate empirical points

Author: Jeffrey M. Chwieroth
Publisher: Cambridge University Press
ISBN: 1107153743
Category : Business & Economics
Languages : en
Pages : 597

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Book Description
Shows how the politics of banking crises has been transformed by the growing 'great expectations' among middle class voters that governments should protect their wealth.