The Influence of Housing Price Developments on Household Consumption: Empirical Analysis for the Czech Republic

Sylvie Dvoráková () and Jakub Seidler
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Sylvie Dvoráková: Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic, http://ies.fsv.cuni.cz/

No 2012/22, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: This paper studies how the change of wealth of households represented by housing prices and stock market prices influences households’ consumption. We provide empirical analysis based on the Czech aggregate data from 1998–2009. We analyse the effect of change in households’ wealth on the consumption of both durable and non-durable goods employing the VAR and VEC models on quarterly data. The robustness of results is verified by Dynamic OLS and Fully Modified OLS framework. We find a positive effect of both housing wealth and stock market wealth on both types of consumption. In case of non-durable goods consumption, we estimate the cointegrating vector and conclude that the elasticity of non-durable goods consumption with respect to housing wealth is over three times greater than with respect to stock market wealth.

Keywords: households; housing prices; consumption; housing wealth; stock market wealth; VAR model; VECM (search for similar items in EconPapers)
JEL-codes: C22 E39 G12 (search for similar items in EconPapers)
Pages: 19pages
Date: 2012-07, Revised 2012-07
New Economics Papers: this item is included in nep-tra and nep-ure
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Citations: View citations in EconPapers (2)

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