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Household Consumption and the Housing Net Worth Channel in Ireland

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  • David Cronin

    (Central Bank of Ireland)

  • Kieran McQuinn

    (Economic and Social Research Institute)

Abstract

The performance of the Irish economy varied considerably over the period 2002-2019, with a credit-led boom up to 2007 being followed by a sharp fall in economic activity and house prices in the following five years and then a recovery in both output and the housing market. This provides a valuable sample for investigating the relevance of the housing net worth channel to consumption developments. The evidence presented here indicates the channel being active in Ireland during the 2007-2012 downturn with a fall in house prices being associated with a decline in consumption. It does not have an impact outside that downturn. Accordingly, the results add to the international evidence of how an accumulation of household debt and a downturn in house prices has an adverse impact on consumption.

Suggested Citation

  • David Cronin & Kieran McQuinn, 2023. "Household Consumption and the Housing Net Worth Channel in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 54(2), pages 125-147.
    • Handle: RePEc:eso:journl:v:54:y:2023:i:2:p:125-147
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    1. David Cronin & Kieran McQuinn, 2023. "The housing net worth channel and the public finances: evidence from a European country panel," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(5), pages 1251-1265, October.
    2. David Cronin & Kieran McQuinn, 2023. "Labour Market Fluctuations and the Housing Net Worth Channel in the EU," De Economist, Springer, vol. 171(1), pages 1-22, March.
    3. McQuinn, Kieran, 2024. "Residential land prices for the Irish property market: An initial examination," Papers WP778, Economic and Social Research Institute (ESRI).
    4. Disch, Wendy & Egan, Paul & Kenny, Eoin & McQuinn, Kieran, 2024. "Contrasting housing supply in Ireland, Northern Ireland and the rest of the United Kingdom," Research Series, Economic and Social Research Institute (ESRI), number RS175.

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