Household Saving and Real House Prices: An International Perspective

Andersen, Palle; Kennedy, Neale

doi:10.2139/ssrn.868991

Cited by 39 publications

(44 citation statements)

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“…Indexes of annual housing prices I it were obtained from the Bank of International Settlements (BIS), which consolidated housing prices reported for some 15 industrialized countries (see Kennedy andAndersen, 1994, or Englund andIoannides, 1997). The BIS series for the United States was quite short, so the national OFHEO-Freddie Mac series (described further below) is used for the U.S.…”

Section: A International Datamentioning

confidence: 99%

Comparing Wealth Effects: The Stock Market versus the Housing Market

Case

Quigley

Shiller

2005

Topics in Macroeconomics

874

549

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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 regression models in levels, first differences and in error-correction form, relating consumption to income and wealth measures. We find a statistically significant and rather large effect of housing wealth upon household consumption.

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Section: A International Datamentioning

confidence: 99%

Comparing Wealth Effects: The Stock Market versus the Housing Market

Case

Quigley

Shiller

2005

Topics in Macroeconomics

874

549

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“…As to the first question, the empirical literature is vast. Cross-or multi-country studies generally find that real estate prices are driven by income growth and interest rates (see for example Kennedy and Andersen, 1994, Englund and Ioannides, 1997, Kasparova and White, 2001). …”

Section: Overview Of the Literaturementioning

confidence: 99%

Booms and busts in housing markets: Determinants and implications

Agnello

Schuknecht

2011

Journal of Housing Economics

293

188

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“…However, they do not control for income expectations explicitly, or for the effects of financial liberalization, and this is liable to bias up the estimated housing wealth or collateral effects on consumption. This is equally true of Kennedy and Andersen (1994) who study consumption in the form of saving ratios. Nevertheless, the latter study confirms the heterogeneity of wealth effects across countries, finding an apparently negative housing wealth effect for Italy, which could feasibly be reflecting its poorly functioning mortgage market.…”

Section: Literature Reviewmentioning

confidence: 94%

Housing Wealth, Credit Conditions and Consumption

Aron¹,

Muellbauer²

2007

Proceedings of the 14th Annual European Real Estate Society Conference - London, UK

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Abstract:There is widespread disagreement about the role of housing wealth in explaining consumption. Much of the empirical literature is marred by poor controls for the common drivers of house prices and consumption, including income, income growth expectations, interest rates, credit supply conditions, other assets and indicators of income uncertainty (such as changes in the unemployment rate). For instance, while the easing of credit supply conditions is usually followed by a house price boom, failure to control for the direct effect of credit liberalization on consumption can over-estimate the effect of housing wealth or collateral on consumption. This paper suggests an empirical model grounded in theory with more complete controls than hitherto used. It is applied to modeling consumption in the UK and South Africa. Both countries experienced substantial credit market liberalization and rising consumption to income ratios. However, South Africa's circumstances in the 1980s prevented an asset price boom, thus allowing the illumination of the direct role of credit liberalization. The paper incorporates methodological improvements in the measurement of credit conditions, and also clarifies the multi-faceted effects of credit liberalization on consumption. _________________________________________________________________________________________ * This is a revised and extended version of Aron and Muellbauer (2000b), incorporating UK evidence, and updating the South African wealth data. We are grateful for comments on earlier drafts from Olympia Bover, Angus Deaton, Jim Poterba and seminar participants at the IMF, Oxford and HM Treasury. We are very grateful for data discussions to Michael Kock, Danie Meyer, Coen Pretorius, Johan Prinsloo and Johan van den Heever of the South African Reserve Bank.

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Household Saving and Real House Prices: An International Perspective

Cited by 39 publications

References 0 publications

Comparing Wealth Effects: The Stock Market versus the Housing Market

Comparing Wealth Effects: The Stock Market versus the Housing Market

Booms and busts in housing markets: Determinants and implications

Housing Wealth, Credit Conditions and Consumption

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