Bubbles in House Prices and their Impact on Consumption: Evidence for the US

Efthymios Pavlidis, Ivan Paya (), David Peel and A M Spiru

No 601552, Working Papers from Lancaster University Management School, Economics Department

Abstract: This paper provides evidence that some aggregate and regional U.S. real house price indices exhibited a bubble in the last few years according to the Phillips et al. (2007) unit root test. We subsequently investigate whether house price acceleration (deceleration) had a signi.cant impact on consumption in an error correction mechanism implied by a wide class of optimizing models. Our results support the argument that real house prices have their major effect on consumption only during the bubble period.

Keywords: Bubble; House prices; Consumption (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:lan:wpaper:601552

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