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Housing and financial wealth effects on consumption: Evidence from the Spanish Survey of Household Finances

Author

Listed:
  • Juan I Martín-Legendre

    (University of A Coruña)

  • Pablo Castellanos-García

    (University of A Coruña)

  • José M Sánchez-Santos

    (University of A Coruña)

Abstract

This paper estimates the consumption effects of housing and financial wealth using micro-data from the five available waves of the Spanish Survey of Household Finances (2002-2014), covering a marked boom-and-bust cycle. Our results suggest a significant positive relationship between household wealth and consumer spending. Disaggregating by asset type, the value of the main residence is the asset category with the highest estimated effect on consumption, whereas the remaining (other real assets, current accounts and deposits, and other financial assets), although still positive and generally significant, have much more limited effects on consumption.

Suggested Citation

  • Juan I Martín-Legendre & Pablo Castellanos-García & José M Sánchez-Santos, 2019. "Housing and financial wealth effects on consumption: Evidence from the Spanish Survey of Household Finances," Economics Bulletin, AccessEcon, vol. 39(3), pages 1930-1940.
    • Handle: RePEc:ebl:ecbull:eb-19-00360
    as

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    References listed on IDEAS

    as
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    3. Charles Grant & Tuomas Peltonen, 2005. "Housing and Equity Wealth Effects of Italian Households," DNB Working Papers 043, Netherlands Central Bank, Research Department.
    4. Janine Aron & John V. Duca & John Muellbauer & Keiko Murata & Anthony Murphy, 2012. "Credit, Housing Collateral, And Consumption: Evidence From Japan, The U.K., And The U.S," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 58(3), pages 397-423, September.
    5. Martin Browning & Mette Gørtz & Søren Leth‐Petersen, 2013. "Housing Wealth and Consumption: A Micro Panel Study," Economic Journal, Royal Economic Society, vol. 0, pages 401-428, May.
    6. Barrell, Ray & Costantini, Mauro & Meco, Iris, 2015. "Housing wealth, financial wealth, and consumption: New evidence for Italy and the UK," International Review of Financial Analysis, Elsevier, vol. 42(C), pages 316-323.
    7. Olympia Bover, 2005. "Wealth effects on consumption: microeconometric estimates from the Spanish survey of household finances," Working Papers 0522, Banco de España.
    8. Bostic, Raphael & Gabriel, Stuart & Painter, Gary, 2009. "Housing wealth, financial wealth, and consumption: New evidence from micro data," Regional Science and Urban Economics, Elsevier, vol. 39(1), pages 79-89, January.
    9. Ray Barrell & E. Philip Davis, 2007. "Financial Liberalisation, Consumption And Wealth Effects In Seven Oecd Countries," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(2), pages 254-267, May.
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    Cited by:

    1. Tamás Kiss & Hoang Nguyen & Pär Österholm, 2021. "Modelling Returns in US Housing Prices—You’re the One for Me, Fat Tails," JRFM, MDPI, vol. 14(11), pages 1-17, October.

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    More about this item

    Keywords

    consumption; elasticity; financial wealth; housing wealth; survey data; wealth effect;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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