How do house prices affect consumption?
evidence from micro data
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Author
Contributions
- Cocco, João F. - Contributor
- National Bureau of Economic Research. - Contributor
Publication
2005 - National Bureau of Economic Research, Cambridge, Mass, Massachusetts
Language
English
Word Count
10,750 words, Guess
Page Count
43 pages
Identifiers
- OCLC Control Number61387674
- Open LibraryOL17627682M
Classifications
- LCCHB1
Description
"Housing is a major component of wealth. Since house prices fluctuate considerably over time, it is important to understand how these fluctuations affect households' consumption decisions. Rising house prices may stimulate consumption by increasing households' perceived wealth, or by relaxing borrowing constraints. This paper investigates the response of household consumption to house prices using UK micro data. We estimate the largest effect of house prices on consumption for older homeowners, and the smallest effect, insignificantly different from zero, for younger renters. This finding is consistent with heterogeneity in the wealth effect across these groups. In addition, we find that regional house prices affect regional consumption growth. Predictable changes in house prices are correlated with predictable changes in consumption, particularly for households that are more likely to be borrowing constrained, but this effect is driven by national rather than regional house prices and is important for renters as well as homeowners, suggesting that UK house prices are correlated with aggregate financial market conditions"--National Bureau of Economic Research web site.
Subjects
Topics
Places
Series Statement
- NBER working paper paper series -- no. 11534.
- Working paper series (National Bureau of Economic Research) -- working paper no. 11534.
Links
Other Editions
- How do house prices affect consumption?
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