The wealth effect of housing on aggregate consumption

Kam Ki Tang

Applied Economics Letters, 2006, vol. 13, issue 3, 189-193

Abstract: This study measures the effect of changes in net housing and financial wealth on household consumption using Australian data over the period Q2:1988-Q1:2003. It is found a permanent one dollar rise in housing wealth leads to a six cent increase in consumption, three times the effect of financial wealth. The result speaks strongly against the notion of assets fungibility, and suggests that a sharp movement in house prices is potentially more disruptive than a corresponding movement in financial asset prices.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:13:y:2006:i:3:p:189-193

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DOI: 10.1080/13504850500391075

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