Download or read book Housing Wealth and Consumption Growth written by Jie Gan and published by . This book was released on 2007 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses a large panel dataset that tracks the housing wealth and spending behavior of 12,793 individuals in Hong Kong to study how housing wealth affects household consumption. Housing wealth is measured based on the repeated-sales price indices of nine districts in Hong Kong, which are estimated using government registry of all the 900,000 repeated housing transactions. Consumption is measured by credit card charges provided by the five largest credit card issuers in Hong Kong. These detailed data make it possible to identify consumption responses to housing wealth based on time-series variation within individual households (through household fixed effects). Further, rich variations across households help pin down the mechanism of the observed consumption sensitivity.I find a significant effect of housing wealth on consumption. Such an effect seems to be on account of a reduction in precautionary saving, as opposed to relaxation of borrowing constraints. In particular, consumption sensitivity exists even in the absence of refinancing and occurs only among less leveraged households and younger households who behave like quot;buffer stockquot; consumers (Gourinchas and Parker, 2002). Finally, consumption does not respond to predictable changes in housing wealth, which is inconsistent with liquidity constraints. The results highlight the importance of housing wealth in influencing consumption even in the absence of refinancing and relaxation of credit constraints.

Download or read book Analyzing the Effects of Financial and Housing Wealth on Consumption using Micro Data written by Carlos Caceres and published by International Monetary Fund. This book was released on 2019-05-24 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the existence of “wealth effects” derived from net equity (in the form of housing, financial assets, and total net worth) on consumption. The study uses longitudinal household-level data?from the Panel Study of Income Dynamics (PSID) ?covering about 7,000-9,000 households in the U.S., with the estimations carried over the period 1999-2017. Overall, wealth effects are found to be relatively large and significant for housing wealth, but less so for other types of wealth, including stocks. Furthermore, the analysis shows how these estimated marginal propensities to consume (MPC) from wealth are closely linked to household characteristics, including income and demographic factors. Finally, underlying structural changes in household characteristics point to potentially lower aggregate MPCs from wealth going forward.

Download or read book How Large is the Housing Wealth Effect written by Chris Carroll and published by . This book was released on 2006 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a simple new method for estimating the size of 'wealth effects' on aggregate consumption. The method exploits the well-documented sluggishness of consumption growth (often interpreted as 'habits' in the asset pricing literature) to distinguish between short-run and long-run wealth effects. In U.S. data, we estimate that the immediate (next-quarter) marginal propensity to consume from a $1 change in housing wealth is about 2 cents, with a final long-run effect around 9 cents. Consistent with several recent studies, we find a housing wealth effect that is substantially larger than the stock wealth effect. We believe that our approach is preferable to the currently popular cointegration- based estimation methods, because neither theory nor evidence justifies faith in the existence of a stable cointegrating vector.

Download or read book Feeling Rich Feeling Poor Housing Wealth Effects and Consumption in Europe written by Mr. Serhan Cevik and published by International Monetary Fund. This book was released on 2023-12-08 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: Households across Europe are struggling with a double crisis—the worst inflation shock since the World War II and a sudden correction in house prices. There is a rich literature on how housing price cycles affect consumer spending, finding mixed results with a wide range of consumption responses to changes in housing wealth. In this paper, using quarterly data on 20 countries in Europe over the period 1980–2023, we analyze the dynamic relationship between inflation-adjusted housing wealth and consumer spending and obtain statistically significant and economically intuitive results. Household consumption responds positively and swiftly to changes in real house prices and gross disposable income as expected. Using the estimated coefficients, we can deduce that the average quarter-on-quarter decline of -1.96 percent in real house prices in the first quarter of 2023 in Europe could dampen consumer spending by about -0.51 percentage points in real terms on a cumulative basis over a horizon of eight quarters.

Download or read book Housing Markets in Europe written by Olivier de Bandt and published by Springer Science & Business Media. This book was released on 2010-10-14 with total page 416 pages. Available in PDF, EPUB and Kindle. Book excerpt: During the recession in the years 2008-2009, the most severe for mature economies in the post-war period, housing markets were often mentioned as having a special responsibility. The objective of this book is to shed light on the cyclical behaviour of the housing markets, its fundamental determinants in terms of supply and demand characteristics, and its relationship with the overall business cycle. The co-movements of house prices across countries are also considered, as well as the channel of transmission of house price changes to the rest of the economy. Particular attention is paid to the effects on private consumption, through possible wealth effects. The book is a compilation of original papers produced by economists and researchers from the four main national central banks in the euro area, also with the participation of leading academics.

Download or read book Housing Consumption and Credit Constraints written by Andreas Lehnert and published by . This book was released on 2004 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: "I test the credit-market effects of housing wealth shocks by estimating the consumption elasticity of house price shocks among households in different age quintiles. Younger households face faster expected income growth and hence would like to borrow more than older households. I estimate consumption elasticities from housing wealth by age quintile to be (4; 0; 3; 8; 3) percent. As predicted by theory, the youngest group has a higher elasticity of consumption than the next two age quintiles. That the consumption of the age quintile on the verge of retirement is responsive to housing wealth is also not surprising: I show that these households are likeliest to "downsize" their house and thus realize any capital gains"--Abstract.

Download or read book The Economics of the US House Price Bubble in the early 21st century written by Michael Kemmer and published by GRIN Verlag. This book was released on 2012-07-06 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2009 in the subject Business economics - Economic and Social History, grade: 1,7, University of Applied Sciences Berlin, language: English, abstract: Why do we have a financial crisis today? Apparently stable and profitable companies, banks and even markets begin to struggle. Where are the roots for this development? The financial crisis of today can be tracked back to the housing bubble and to the following housing crisis in the USA. But who where the participants and what were their actions? The following chapters try to give some explanations and reasons for this. The housing bubble in the U.S and the following financial crisis had got their own reasons and drives. It is important to know these explanations and mechanisms to avoid such developments in the future. Managers and leaders should know, which reactions follow which actions. The objective of this assignment is to explain the reasons for the U.S housing bubble and the mistakes made by the participants of this development. The work on the assignment started with a mind map of questions like: who are participants of the house bubble crisis, what are the connections between these participants, and what were their actions. All findings of this assignment are mainly Internet based and complemented by literature sources regarding topics like financial crisis, housing bubble, and subprime mortgage crisis. After providing a brief overview of the advance of the housing bubble, with a look to the Asia crisis, the premises of the housing bubble are explained. Following to that the housing boom is described in more detail. Afterwards, the focus will be changed to customer loyalty. Along with that the customer value and satisfaction is very important for a long term company-customer relationship. At the end of this assignment the conclusion sums up with the genesis of the housing bubble.

Download or read book Housing Wealth Effects written by Eric S. Belsky and published by . This book was released on 2004 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Housing Wealth and Aggregate Saving written by Jonathan Skinner and published by . This book was released on 1989 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recent appreciation in housing value can have large effects on aggregate saving. This paper uses a simulation model to show that aggregate saving will decline substantially if life cycle homeowners spend down their housing windfalls. Homeowners with a bequest motive, however, may save more to assist their children in buying the now more expensive housing. To test whether families spend their housing capital gains, I use housing, income, and consumption data from the Panel Study of Income Dynamics. While a cross-section time-series regression implies that housing wealth does affect saving, a fixed-effects model finds no effect.

Download or read book The Blackwell Companion to the Economics of Housing written by Susan J. Smith and published by John Wiley & Sons. This book was released on 2010-01-22 with total page 648 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Blackwell Companion to the Economics of Housing willhelp students and professionals alike to explore key elements ofthe housing economy: home prices, housing wealth, mortgage debt,and financial risk. Features 24 original essays, including an editorialintroduction and three section overviews Includes 39 world-class authors from a mix of educational andfinancial organizations in the UK, Europe, Australia, and NorthAmerica Broadly-based, scholarly, and accessible, serving students andprofessionals who wish to understand how today’s housingeconomy works Profiles the role and relevance of housing wealth; themismanagement of mortgage debt; and the pitfalls and potential ofhedging housing risk Key topics include: the housing price bubble and crash; thesubprime mortgage crisis in the US and its aftermath; the linksbetween housing wealth, the macroeconomy, and the welfare ofhome-occupiers; the mitigation of credit and housing investmentrisks Specific case studies help to illustrate concepts, along withnew data sets and analyses to illustrate empirical points

Download or read book Wealth Effects on Household Final Consumption written by Yener Coskun and published by . This book was released on 2018 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: The study primarily explores the linkage between wealth effects, arising from stock and housing market channels, and household final consumption for 11 advanced countries over the period from 1970 Q1 to 2015 Q4. As a modelling strategy, we employ regression analysis through the common correlated effects mean group (CCEMG) estimator, as well as Durbin-Hausman cointegration and Dumitrescu and Hurlin (2012) causality tests. The study provides various pieces of evidence through whole-panel and country-level analyses. In this respect, we find that consumption is mostly explained by income and housing wealth is positively and significantly correlated with consumption. As counter-intuitive evidence, we detect a negative linkage between consumption and stock wealth. The evidence also suggests a long-run cointegration relationship among consumption, income, interest rates, housing wealth, and stock wealth. Moreover, we find bidirectional causality between consumption and income, stock wealth, housing wealth, and interest rates. Overall, the evidence implies that housing wealth, rather than stock wealth, is the primary source of consumption growth in advanced countries.

Download or read book The Housing Boom and Bust written by Thomas Sowell and published by Basic Books (AZ). This book was released on 2009-05-12 with total page 194 pages. Available in PDF, EPUB and Kindle. Book excerpt: Explains how we got into the current economic disaster that developed out of the economics and politics of the housing boom and bust. The "creative" financing of home mortgages and "creative" marketing of financial securities based on these mortgages to countries around the world, are part of the story of how a financial house of cards was built up--and then collapsed.

Download or read book Has the Effect of Housing Wealth on Household Consumption Been Overestimated New Evidences on Magnitude and Allocation written by Linna Zhu and published by . This book was released on 2019 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: The effect of housing wealth on household consumption is puzzling as existing empirical results do not match with theoretical predictions. Existing theories - life cycle theory, permanent income hypothesis and user cost model - suggest that housing wealth impact should be small. However, most prior studies find that Marginal Propensity to Consume (MPC) out of housing wealth ranges between 0.04 to 0.09, indicating material impact of housing wealth on household consumption. Motivated by this discordance, this study uses the Panel Study of Income Dynamics to provide a step by step analysis to show how the housing wealth effect decreases as biases from unobserved variables are properly addressed. Once households' unobserved preferences towards consumption and their future expected income are controlled for, our estimated MPC drops significantly. We also directly control for home equity extraction to disentangle the pure wealth effect channel and the collateral channel. Our findings show that a one percent increase in perceived housing wealth is associated with 0.01-0.02 percent increase in real, non-housing consumption after directly controlling for the collateral channel. Our estimated magnitude of housing wealth effect is much smaller than previous findings. Additionally, we find heterogeneity in MPCs across consumption categories - consumptions that are necessary in daily lives such as food and transportation do not respond to changes in perceived housing wealth while households increase their spending on clothes and recreation as housing wealth increases. We also employ an IV approach to disentangle permanent and transitory housing wealth shocks. Our results indicate that it is the deviation between perceived house price appreciation rate and the real house price appreciation rate in fundamental values that drives this small magnitude of MPC out of housing wealth in the short run (in cloth and recreation) and this housing wealth effect will move towards to zero in the long run as the perception converges with the fundamental values.

Download or read book The Economics of Aging written by David A. Wise and published by University of Chicago Press. This book was released on 2009-05-15 with total page 428 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Economics of Aging presents results from an ongoing National Bureau of Economic Research project. Contributors consider the housing mobility and living arrangements of the elderly, their labor force participation and retirement, the economics of their health care, and their financial status. The goal of the research is to further our understanding both of the factors that determine the well-being of the elderly and of the consequences that follow from an increasingly older population with longer individual life spans. Each paper is accompanied by critical commentary.

Download or read book Housing Collateral and Consumption Insurance Across US Regions written by Hanno Lustig and published by . This book was released on 2004 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: Time-variation in the degree of risk-sharing induced by changes in the value of housing collateral sheds new light on the consumption correlation puzzle. If debts can only be enforced to the extent that they are collateralized by housing wealth, a decrease in the value of housing collateral endogenously increases exposure to idiosyncratic risk. This increases the cross-sectional consumption growth dispersion across regions and it reduces the amount of regional income risk shared. We investigate risk-sharing patterns for the 30 largest US metropolitan areas and find empirical support for the housing collateral channel. In times when housing collateral is scarce, the dispersion of consumption growth relative to income growth is twice as high as when collateral is abundant. A structural estimation of the model's consumption dynamics implies a time path for consumption growth dispersion that matches the one in the data. The housing collateral effect is the key element that enables this match.

Download or read book How Large are Housing and Financial Wealth Effects A New Approach written by Christopher D. Carroll and published by . This book was released on 2015 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a simple new method for measuring 'wealth effects' on aggregate consumption. The method exploits the stickiness of consumption growth (sometimes interpreted as reflecting consumption 'habits') to distinguish between immediate and eventual wealth effects. In U.S. data, we estimate that the immediate (next-quarter) marginal propensity to consume from a $1 change in housing wealth is about 2 cents, with a final eventual effect around 9 cents, substantially larger than the effect of shocks to financial wealth. We argue that our method is preferable to cointegration-based approaches, because neither theory nor evidence supports faith in the existence of a stable cointegrating vector.

Download or read book Empirical Evidence of the Housing Wealth Effect written by Sabine Winkler and published by . This book was released on 2016 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Understanding the housing wealth effect is important for macroeconomic forecasting and policy setting. The paper uses cointegration theory to study the interplay between consumption, income and housing wealth in 14 countries observed quarterly from 1995 to 2013. Cointegration is found to be present in Canadian, Danish, German, Italian, Japanese and United States data, implying that the consistently estimable propensity to consume out of housing wealth is in the range of two cents per US dollar in Italy and nine cents per US dollar in Denmark. The housing wealth effect tends to be lower in countries where the income elasticity of consumption, wealth volatility and income inequality are higher. The effect tends to be larger in countries where business conditions are superior and access to credit is easier. Examining the short-run relationship between consumption, income and housing wealth highlights that transitory income moves do not Granger-cause consumption growth, and transitory housing wealth changes tend to contain information useful for predicting consumption growth in each sample country. A correlation analysis shows points of policy action aimed at influencing the housing wealth effect, and thus aggregate consumption and the economy.