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How Do House Prices Affect Consumption Patterns Across Categories?

Author

Listed:
  • Wonhyeok Kim

    (Korea Enterprises Federation)

  • Soohyung Lee

    (Seoul National University)

  • Yoonsoo Lee

    (Sogang University)

Abstract

This study examines the extent to which house prices may affect consumption patterns across categories. For this purpose, we merge house price data with transaction data between 2012 and 2016, provided by a major credit card company in South Korea. We find a positive relationship between house prices and overall consumption, but great heterogeneity across consumption categories. Results imply that the change in house price accounts for 25% of the change in total consumption. Moreover, such effects of house price change quantitatively vary by consumption categories, from 0.15% to 46.08%.

Suggested Citation

  • Wonhyeok Kim & Soohyung Lee & Yoonsoo Lee, 2021. "How Do House Prices Affect Consumption Patterns Across Categories?," Korean Economic Review, Korean Economic Association, vol. 37, pages 367-398.
    • Handle: RePEc:kea:keappr:ker-20210701-37-2-06
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    References listed on IDEAS

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    More about this item

    Keywords

    House Price; Consumption Category; Wealth Effect; Role of Debt;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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