Housing wealth, financial wealth, and consumption: New evidence from micro data

Bostic, Raphael W.; Gabriel, Stuart A.; Painter, Gary

doi:10.1016/j.regsciurbeco.2008.06.002

Cited by 329 publications

(252 citation statements)

References 18 publications

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“…Among these studies, Campbell and Cocco (2007) find that the elderly respond to shocks in housing wealth and working age individuals do not. Bostic et al (2009) estimate a small elasticity of consumption with respect to housing price shocks, but find larger effects for households that they identify as credit-constrained.…”

Section: A Housing Wealth Effectsmentioning

confidence: 93%

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House Prices and Marital Stability

Farnham

Schmidt

Sevak

2011

American Economic Review

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We investigate the effect of house price changes on MSA-level divorce rates using data for 1991-2010 from the Current Population Survey and the Federal Housing Finance Agency. Our findings suggest that changing house prices significantly affect divorce rates, and that these effects are asymmetric with respect to housing gains versus losses. In addition, we find differential effects for groups that are more likely to be homeowners versus renters. Some of this evidence is consistent with homeowners being locked into their homes by increased transactions costs in down markets.3

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Section: A Housing Wealth Effectsmentioning

confidence: 93%

“…1 These dramatic changes in prices, illustrated in Figure 1, have led economists to renew their focus on the effect of housing wealth shocks on a number of outcomes, including consumption (e.g. Campbell and Cocco, 2007;Bostic, Gabriel and Painter, 2009), debt accumulation (e.g. Mian and Sufi, 2010), and labor supply (e.g.…”

Section: Introductionmentioning

confidence: 99%

House Prices and Marital Stability

Farnham

Schmidt

Sevak

2011

American Economic Review

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“…Indeed, Leamer (2007) shows that, of the components of GDP, residential investment o ers by far the best early warning sign of an oncoming recession. A large literature debates the e ects of nancial and housing wealth in the determination of consumer spending (see Bostic et al, 2009 the regulatory rhetoric of nancial stability that accompanies such actions is anchored in a logic of containment, with the promise to minimize potential contagion of large-scale fallouts to other sectors in the economy. At the same time, however, the role of the "lender of last resort" is rarely well de ned and quite o en ad hoc.…”

Section: Towards a New Synthesis?mentioning

confidence: 99%

Form Follows Function: On the Interaction between Real Estate Finance and Urban Spatial Structure

Bieri

2012

SSRN Journal

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“…Endogeneity arises because wealth, our main explanatory variable, is linked to the accumulation of past savings, our dependent variable. Due to the lack of appropriate instruments this problem is difficult to handle even with household-level data (Bostic et al, 2009 Levin et al (2002, LLC) and Hadri (2000), that test for the existence of a common root in the panel, and the one built by Im et al (2003, IPS), that allows for heterogeneus, individual roots. All tests are carried out in two different model specifications: one assuming an individual intercept and the other with an individual intercept and a time trend.…”

Section: The Empirical Strategymentioning

confidence: 99%

Global imbalances and household savings: The role of wealth

Salotti

2010

The Social Science Journal

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Many claim that fluctuations in US private savings help to create and to sustain global imbalances because of their influence on the current account deficit. To test this claim, this paper investigates the determinants of aggregate household savings using a panel of 18 developed countries for the period 1980-2005. We weave two strands of literature: the first strand from consumer theory, considering specifically the `wealth effect', the second strand from aggregate private savings theory. The original contribution of this paper derives from the main explanatory variables of the household savings function: two measures of household wealth, the first a financial variable and the second a variable for tangible/housing stock. The salience of these variables has not been tested before. The model is then enriched with variables taken from the private savings literature.To find the best technique to estimate the long run savings function, unit root and cointegration tests are carried out, from which evidence of a cointegrating relationship is found. The group means FMOLS is used to estimate the model. The empirical evidence suggests effects consistent with theory: an increase in wealth negatively affects household savings. Furthermore, when important explanatory variables, such as government savings and population dependency ratios, are included in the model, tangible wealth becomes the only kind of wealth to (weakly and negatively) influence household savings in developed countries. In the US however, wealth does not seem to affect household savings negatively, it seems instead that government savings and population changes better explain the decline of savings during the past two decades. This finding provides additional evidence on the issue of global imbalances, and suggests that the recent booms of the stock and the real estate markets should not be blamed for the decline in US household and private savings.JEL: E21, C23

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Housing wealth, financial wealth, and consumption: New evidence from micro data

Cited by 329 publications

References 18 publications

House Prices and Marital Stability

House Prices and Marital Stability

Form Follows Function: On the Interaction between Real Estate Finance and Urban Spatial Structure

Global imbalances and household savings: The role of wealth

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