Consumption, household portfolios and the housing market in France

Consommation, patrimoine des ménages et marché immobilier en France

Valérie Chauvin () and John Muellbauer ()
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Valérie Chauvin: Banque de France
John Muellbauer: Nuffield - Nuffield - University of Oxford, Institute for New Economic Thinking

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Abstract: Consumption and wealth co‑move because of shifts in credit conditions, interest rates, income expectations or demographics, whose impact should be identified to disentangle wealth effects. The findings for France from a 6‑equation model for consumption and the main elements of household portfolios are that marginal propensities to consume financial wealth are comparable to those in the US or the UK, but housing wealth effects are far weaker, and aggre‑ gate consumption falls with higher house prices relative to income. This is interpreted as the need for younger households in France then to save more if they wish to become homeowners, while other tenants can expect rents to increase in the future, saving more in consequence. The estimates suggest that during the French house price boom between 1996 and 2008, offsets from the negative effect of higher house prices and higher debt neutralized the positive effects of higher housing wealth and easier credit on consumption, evading the amplifying feedbacks, via consumption, of the US boom.

Keywords: household debt; monetary transmission; housing collateral; credit conditions; consumption; transmission monétaire; endettement des ménages; conditions de crédit; consommation (search for similar items in EconPapers)
Date: 2018-10-29
Note: View the original document on HAL open archive server: https://insee.hal.science/hal-05497547v1
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Published in Economie et Statistique / Economics and Statistics, 2018, 500-501-502, pp.157-178. ⟨10.24187/ecostat.2018.500t.1950⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05497547

DOI: 10.24187/ecostat.2018.500t.1950

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