EconPapers    
Economics at your fingertips  
 

Housing and household consumption: An investigation of the wealth and collateral effects

Eduard Suari-Andreu

Journal of Housing Economics, 2021, vol. 54, issue C

Abstract: The macroeconomic literature has identified a robust relationship between house prices and consumption at the aggregate level. The microeconomic literature points to three possible mechanisms behind this relationship: the wealth effect, whereby households respond to changes in housing wealth by spending/saving more; the collateral effect whereby households use the main residence as collateral for consumer loans; and the common causality effect whereby one or more variables affect both house prices and consumption simultaneously. I test the implications of these mechanisms using data from a panel survey representative of the Dutch population. For that purpose, I employ measures of subjective house prices and subjective house price expectations. Results suggest that the wealth and the collateral effects play, at best, minor roles in explaining the aggregate relationship between house prices and consumption.

Keywords: Housing; Saving; Consumption; House prices; Subjective expectations (search for similar items in EconPapers)
JEL-codes: D1 D14 D15 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S105113772100036X
Full text for ScienceDirect subscribers only

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:eee:jhouse:v:54:y:2021:i:c:s105113772100036x

DOI: 10.1016/j.jhe.2021.101786

Access Statistics for this article

Journal of Housing Economics is currently edited by H. O. Pollakowski

More articles in Journal of Housing Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-03-12
Handle: RePEc:eee:jhouse:v:54:y:2021:i:c:s105113772100036x