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Housing wealth, financial wealth, and consumption: New evidence for Italy and the UK

Ray Barrell, Mauro Costantini () and Iris Meco

International Review of Financial Analysis, 2015, vol. 42, issue C, 316-323

Abstract: This paper aims to investigate the long-run impact of housing and financial wealth on consumption in Italy and the UK using two different estimation methods. The novelty of the paper is to consider the recent financial crisis when studying wealth effects. The dynamics of wealth effects are also evaluated by a rolling regression analysis. The results show that: i) housing wealth plays no role in Italy, whereas it is significant in the UK; ii) in both countries, the financial wealth exerts a positive and significant impact on aggregate consumption; and iii) by and large, the housing wealth effect assumes relatively increasing importance over time in the UK, while for Italy this is true for the financial wealth effect.

Keywords: Financial wealth; Housing wealth; Consumption; Financial crisis (search for similar items in EconPapers)
JEL-codes: C22 C26 E21 G01 (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:eee:finana:v:42:y:2015:i:c:p:316-323