Do House Prices Affect Consumption? A Re‐assessment of the Wealth Hypothesis

Abstract

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Wealth Effects on Household Final Consumption: Stock and Housing Market Channels

“…However, in line with the results of some empirical studies in the literature, such as those by Poterba and Samwick (1995), Vissing-Jørgensen (1999), Dynan and Maki (2001), Slacalek (2009), and Case et al (2011), among others, our results on the negative linkage between stock wealth and consumption are clearly counter-intuitive. The importance of housing market wealth and financial wealth in affecting consumption may be an empirical matter, as highlighted by Case et al (2011), and the differences in empirical specification may be the cause of the conflicting results (see Cristini and Sevilla 2014). In this respect, the evidence of a negative stock wealth effect can be explained by employing aggregate-level data (see Bostic et al 2009;Carroll et al 2011;Helander 2014) and our other modelling features, as also emphasized in similar studies (i.e., see Ludvigson and Steindel 1999;Case et al 2005Case et al , 2011.…”

Housing Wealth Effects: Evidence from an Australian Panel

“…() and Campbell and Cocco () is the empirical specification of the model: the former use an equation for the level of consumption, while the latter use an equation for consumption growth. Cristini and Sevilla () suggest that differences in the empirical specification may be the cause of the conflicting results. The results presented in this paper are largely based on the methodology employed in Attanasio et al .…”

“…The major methodological difference between Attanasio et al (2009) andCampbell andCocco (2007) is the empirical specification of the model: the former use an equation for the level of consumption, while the latter use an equation for consumption growth. Cristini and Sevilla (2014) suggest that differences in the empirical specification may be the cause of the conflicting results. The results presented in this paper are largely based on the methodology employed in Attanasio et al (2009), but as a robustness test we also consider the model specified in Campbell and Cocco (2007), and draw very similar conclusions with regard to the likely cause of housing wealth effects.…”

Housing Wealth Effects in Japan: Evidence Based on Household Micro Data

“…provided by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) 12 as the relevant land price. Finally, we estimate the nominal value of survey households' residential land assets by multiplying the land price per square meter at the location closest to households' approximate address determined in the manner just described and the land area (square meters) of their home reported in the FIES.…”

“…11 The median (mean) distance for our sample homeowner households is 0.53 (1.09) kilometers. 12 The "Land Market Value Publication" annually reports land prices per square meter (of 5,000-20,000 residential sites) all over Japan as of January 1. 13 Following the "Ministerial Ordinance for Durable Years of Depreciable Assets," we employ the following annual depreciation rates: 9.9% for wooden structures, 4.8% for reinforced concrete or steel-frame structures, and 5.9% for other structures.…”