Consumption, Housing Wealth and Financial Crises

Ray Barrell and Simon Kirby

National Institute Economic Review, 2008, vol. 205, 57-60

Abstract: This note reviews recent Institute work on the factors that might affect the future evolution of consumption. Drawing on Barrell and Davis (2007), it discusses the evidence for the effects of housing wealth on consumption, and shows that there has been strong and well supported evidence for a link for some time. This evidence suggests that a fall in house prices will cause consumption growth to slow. The discussion also covers evidence from Barrell, Davis and Pomerantz (2006) on the effects of financial crises on consumption behaviour. They suggest that there are large and significant negative effects on consumption during banking crises that are over and above the effects on consumption of the crisis-induced changes in income and wealth. Much of this work is embedded in our structural model, NiGEM, and it is possible to estimate the effects of house price declines and financial crises on consumption and income using the model. The note also gives a set of ready reckoners for the impacts of house price declines on output and of a given associated fall in the level of housing wealth on the level of consumption.

Date: 2008
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

Related works:
Journal Article: Consumption, Housing Wealth and Financial Crises (2008)
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:cup:nierev:v:205:y:2008:i::p:57-60_10

Access Statistics for this article

More articles in National Institute Economic Review from National Institute of Economic and Social Research Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK. Contact information at EDIRC.
Bibliographic data for series maintained by Kirk Stebbing ().