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House Prices and Consumption in the United States

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  • Philip Vinson

Abstract

I estimate the house price elasticity of consumption using panel data for households in the United States for the years 1999–2013. I find that the average house price elasticity of consumption is positive but modest and varies by age. However, when measuring the elasticity separately for households who are credit constrained, I find that households with a high loan‐to‐value mortgage have a much larger house price elasticity of consumption of about 0.2. I also find that poor hand‐to‐mouth households consume more than others when their house price increases while wealthy hand‐to‐mouth ones do not.

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  • Philip Vinson, 2021. "House Prices and Consumption in the United States," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(2), pages 635-662, June.
    • Handle: RePEc:bla:reesec:v:49:y:2021:i:2:p:635-662
    DOI: 10.1111/1540-6229.12271
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    References listed on IDEAS

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    1. Orazio Attanasio & Andrew Leicester & Matthew Wakefield, 2011. "Do House Prices Drive Consumption Growth? The Coincident Cycles Of House Prices And Consumption In The Uk," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 399-435, June.
    2. Case Karl E. & Quigley John M. & Shiller Robert J., 2005. "Comparing Wealth Effects: The Stock Market versus the Housing Market," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-34, May.
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    4. Campbell, John Y. & Cocco, Joao F., 2007. "How do house prices affect consumption? Evidence from micro data," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 591-621, April.
    5. Case, Karl E. & Quigley, John M. & Shiller, Robert J., 2001. "Comparing Wealth Effects: The Stock Market versus The Housing Market," Department of Economics, Working Paper Series qt44k6g6vx, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    6. Richard Rogers, 1992. "Living and dying in the U.S.A.: Sociodemographic determinants of death among blacks and whites," Demography, Springer;Population Association of America (PAA), vol. 29(2), pages 287-303, May.
    7. Greg Kaplan & Giovanni L. Violante, 2014. "A Model of the Consumption Response to Fiscal Stimulus Payments," Econometrica, Econometric Society, vol. 82(4), pages 1199-1239, July.
    8. Andreas Lehnert, 2004. "Housing, consumption, and credit constraints," Finance and Economics Discussion Series 2004-63, Board of Governors of the Federal Reserve System (U.S.).
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    Cited by:

    1. Lee, Seungyoon, 2023. "House prices, homeownership, and household consumption: Evidence from household panel data in Korea," Economic Modelling, Elsevier, vol. 126(C).

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