The Relationship between Housing Wealth, Financial Wealth and Household Consumption in China

Jie Chen and Aiyong Zhu

ERES from European Real Estate Society (ERES)

Abstract: The paper investigates the relationship between changes in housing wealth, financial wealth and the trend movements of household consumption in urban China. By employing the VECM cointegration model, we demonstrate that there is a unique long-run cointegrating relationship between the household consumption, disposable income, financial wealth and housing wealth in urban China. Meanwhile, we find that the housing wealth is the mere factor to restore the long run equilibrium relationship when the cointegrated system is disturbed by external shock. In addition, our permanent-transitory variance decomposition analysis indicates that nearly all variance in the movement of consumption is permanent, supporting the classical random walk hypothesis of consumption behavior. However, a large proportion of variance in the short-run movements of housing wealth is found to be transitory.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2009-01-01
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://eres.architexturez.net/doc/oai-eres-id-eres2009-276 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2009_276

Access Statistics for this paper

More papers in ERES from European Real Estate Society (ERES) Contact information at EDIRC.
Bibliographic data for series maintained by Architexturez Imprints ().