Housing Wealth and Consumption: A Micro Panel Study
Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
Standard
Housing Wealth and Consumption: A Micro Panel Study. / Browning, Martin; Gørtz, Mette; Leth-Petersen, Søren.
I: Economic Journal, Bind 123, Nr. 568, 05.2013, s. 401-428.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
Harvard
APA
Vancouver
Author
Bibtex
}
RIS
TY - JOUR
T1 - Housing Wealth and Consumption: A Micro Panel Study
AU - Browning, Martin
AU - Gørtz, Mette
AU - Leth-Petersen, Søren
PY - 2013/5
Y1 - 2013/5
N2 - There is strong evidence that house prices and consumption are closely synchronized. There is, however, disagreement over the causes of this link. This paper examines if there is a wealth effect of house prices on consumption. We use a rich household level panel data set with information about house ownership, income, wealth, and demographics for a large sample of the Danish population in the period 1987-1996. We model the dependence of the growth rate of total household expenditure with unanticipated innovations to house prices. Controlling for factors related to competing explanations, we find little evidence of a housing wealth effect on consumption: unexpected innovations to house prices are uncorrelated with changes in total expenditure at the household level. A reform in 1992 allowed – for the first time - house owners to use their housing equity as collateral for consumption loans. We find that young house owners likely to be affected by credit constraints react to house price changes after 1993. Our findings suggest that house prices impact total expenditure through improved collateral rather than directly through wealth.
AB - There is strong evidence that house prices and consumption are closely synchronized. There is, however, disagreement over the causes of this link. This paper examines if there is a wealth effect of house prices on consumption. We use a rich household level panel data set with information about house ownership, income, wealth, and demographics for a large sample of the Danish population in the period 1987-1996. We model the dependence of the growth rate of total household expenditure with unanticipated innovations to house prices. Controlling for factors related to competing explanations, we find little evidence of a housing wealth effect on consumption: unexpected innovations to house prices are uncorrelated with changes in total expenditure at the household level. A reform in 1992 allowed – for the first time - house owners to use their housing equity as collateral for consumption loans. We find that young house owners likely to be affected by credit constraints react to house price changes after 1993. Our findings suggest that house prices impact total expenditure through improved collateral rather than directly through wealth.
U2 - 10.1111/ecoj.12017
DO - 10.1111/ecoj.12017
M3 - Journal article
VL - 123
SP - 401
EP - 428
JO - The Economic Journal
JF - The Economic Journal
SN - 0013-0133
IS - 568
ER -
ID: 43251938