Real Estate Versus Financial Wealth in Consumption

John D. Benjamin, Peter Chinloy and G. Donald Jud

The Journal of Real Estate Finance and Economics, 2004, vol. 29, issue 3, 354 pages

Abstract: The consumption function for the U.S. economy is estimated with real estate and financial wealth for quarterly data for 1952:1--2001:4. An additional dollar of real estate wealth increases consumption by 8 cents in the current year, as compared with only 2 cents for financial wealth. The results are consistent with theoretical bounds on the marginal propensity to consume from aggregate wealth. The decline in the stock market during 2000--2001 had a limited impact on aggregate demand in part because of an offsetting real estate wealth effect.

Date: 2004
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