Economics at your fingertips  

Housing Wealth and Consumption: Evidence from Geographically-Linked Microdata

Aditya Aladangady

American Economic Review, 2017, vol. 107, issue 11, 3415-46

Abstract: Rising home values also raise the cost of living, offsetting their impact on consumption. However, additional home equity collateral can loosen borrowing constraints, increasing spending for households that value their current endowment of housing highly. I use geographically linked microdata to exploit regional heterogeneity in housing markets and identify the causal effect of house price fluctuations on consumer spending. A $1 increase in home values leads to a $0.047 increase in spending for homeowners, but a negligible response for renters. Results reflect large responses among credit constrained households, suggesting looser borrowing constraints are a primary driver of the MPC out of housing wealth.

JEL-codes: D12 D14 E21 R31 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/aer.20150491
References: Add references at CitEc
Citations View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) (application/pdf) ... maoxCqN8rZAYMGQjAX8z (application/zip) ... AVqdfdxLZO7tTtle_RQG (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

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:

Ordering information: This journal article can be ordered from

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().

Page updated 2018-06-15
Handle: RePEc:aea:aecrev:v:107:y:2017:i:11:p:3415-46