Consumption and Housing Wealth Breakdown of the Effect of a Rise in Interest Rates

Manuel Leon Navarro () and Rafael Flores de Frutos ()
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Manuel Leon Navarro: Administración y Dirección de Empresas - Colegio Universitario Cardenal Cisneros
Rafael Flores de Frutos: Centro Universitario de Estudios Financieros (CUNEF) - Centro Universitario de Estudios Financieros (CUNEF)

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Abstract: In this article the effect on consumption is estimated of a fall in housing wealth and housing prices, resulting from an increase in interest rates. With the help of a dynamic multiequation, macroeconomic model, the consumer response function is broken down into two parts: a direct response, related to a rise in the cost of credit and another indirect one related to the deterioration of the property market. Estimating the theoretical model is done by means of a vectorial error-correction model.

Keywords: Social; Sciences; &; Humanities (search for similar items in EconPapers)
Date: 2011-04-14
Note: View the original document on HAL open archive server: https://hal.science/hal-00687732
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Published in Applied Economics, 2011, pp.1. ⟨10.1080/00036846.2011.558484⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00687732

DOI: 10.1080/00036846.2011.558484

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