Wealth Effects Revisited 1975-2012

Karl Case, John Quigley and Robert Shiller

Critical Finance Review, 2013, vol. 2, issue 1, 101-128

Abstract: We re-examine the links between changes in housing wealth, financial wealth, and consumer spending. We extend a panel of U.S. states observed quarterly during the seventeen-year period, 1982 through 1999, to the thirty-seven year period, 1975 through 2012Q2. Using techniques reported previously, we impute the aggregate value of owner-occupied housing, the value of financial assets, and measures of aggregate consumption for each of the geographic units over time. We estimate regression models in levels, first differences and in error-correction form, relating per capita consumption to per capita income and wealth. We find a statistically significant and rather large effect of housing wealth upon household consumption. This effect is consistently larger than the effect of stock market wealth upon consumption.

Date: 2013
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Related works:
Working Paper: Wealth Effects Revisited: 1975-2012 (2013)
Working Paper: Wealth Effects Revisited 1975-2012 (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlcfr:104.00000009

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