Household Reaction to Changes in Housing Wealth

Robert J. Shiller ()

No 1459, Cowles Foundation Discussion Papers from Cowles Foundation, Yale University

Abstract: It is widely claimed that housing wealth, as well as stock prices, have an impact on consumption and hence on aggregate economic activity. This paper presents a broad overview of the issues that arise in evaluating this claim in the context of recent research in behavioral economics. Particular attention is paid to a model of the response of consumption to wealth components produced by Christopher Carroll [2004].

Keywords: Wealth effect; home prices; stock prices; consumption; saving; life cycle theory; interest rates; inflation; bubble (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ltv and nep-ure
Date: 2004-04
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