IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v13y2006i3p189-193.html
   My bibliography  Save this article

The wealth effect of housing on aggregate consumption

Author

Listed:
  • Kam-Ki Tang

Abstract

This study measures the effect of changes in net housing and financial wealth on household consumption using Australian data over the period Q2:1988-Q1:2003. It is found a permanent one dollar rise in housing wealth leads to a six cent increase in consumption, three times the effect of financial wealth. The result speaks strongly against the notion of assets fungibility, and suggests that a sharp movement in house prices is potentially more disruptive than a corresponding movement in financial asset prices.

Suggested Citation

  • Kam-Ki Tang, 2006. "The wealth effect of housing on aggregate consumption," Applied Economics Letters, Taylor & Francis Journals, vol. 13(3), pages 189-193.
    • Handle: RePEc:taf:apeclt:v:13:y:2006:i:3:p:189-193
    DOI: 10.1080/13504850500391075
    as

    Download full text from publisher

    File URL: http://www.informaworld.com/openurl?genre=article&doi=10.1080/13504850500391075&magic=repec&7C&7C8674ECAB8BB840C6AD35DC6213A474B5
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13504850500391075?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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.
    2. Nikola Dvornak & Marion Kohler, 2007. "Housing Wealth, Stock Market Wealth and Consumption: A Panel Analysis for Australia," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 117-130, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Riccardo De Bonis & Andrea Silvestrini, 2012. "The effects of financial and real wealth on consumption: new evidence from OECD countries," Applied Financial Economics, Taylor & Francis Journals, vol. 22(5), pages 409-425, March.
    2. Renée A. Fry & Vance L. Martin & Nicholas Voukelatos, 2010. "Overvaluation in Australian Housing and Equity Markets: Wealth Effects or Monetary Policy?," The Economic Record, The Economic Society of Australia, vol. 86(275), pages 465-485, December.
    3. Benítez-Silva, Hugo & Eren, Selçuk & Heiland, Frank & Jiménez-Martín, Sergi, 2015. "How well do individuals predict the selling prices of their homes?," Journal of Housing Economics, Elsevier, vol. 29(C), pages 12-25.
    4. Signe Rosenberg, 2015. "The Impact of a Change in Real Estate Value on Private Consumption in Estonia," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 7(2).
    5. Russell James, 2009. "Tenant time preference as a barrier to homeownership," Applied Economics Letters, Taylor & Francis Journals, vol. 16(10), pages 1073-1077.
    6. Atalay, Kadir & Whelan, Stephen & Yates, Judith, 2013. "Housing Wealth and Household Consumption: New Evidence from Australia and Canada," Working Papers 2013-04, University of Sydney, School of Economics.
    7. Chen, Xin & Qin, Yaohua & Xiao, He & Zhang, Yifei, 2019. "Microfinancing and Home-purchase Restrictions: Evidence from the Online “Peer-to-Peer” Lending in China," MPRA Paper 95375, University Library of Munich, Germany.
    8. Ersi Athanassiou & Ekaterini Tsouma, 2017. "Financial and Housing Wealth Effects on Private Consumption: The Case of Greece," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 15(1), pages 63-86.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Janine Aron & John Muellbauer, 2006. "Housing Wealth, Credit Conditions and Consumption," CSAE Working Paper Series 2006-08, Centre for the Study of African Economies, University of Oxford.
    2. Wong, Wang-Li & Law, Siong Hook & Said, Rusmawati & Chin, Lee, 2015. "Consumption and Housing Wealth: A Malaysian Case that Demonstrates a Negative Relationship," MPRA Paper 96866, University Library of Munich, Germany.
    3. Beatrice Simo-Kengne & Stephen Miller & Rangan Gupta & Goodness Aye, 2015. "Time-Varying Effects of Housing and Stock Returns on U.S. Consumption," The Journal of Real Estate Finance and Economics, Springer, vol. 50(3), pages 339-354, April.
    4. Eva Sierminska & Yelena Takhtamanova, 2006. "Wealth Effects Out of Financial and Housing Wealth: Cross Country and Age Group Comparisons," LWS Working papers 4, LIS Cross-National Data Center in Luxembourg.
    5. Christian Dreger & Hans-Eggert Reimers, 2012. "The long run relationship between private consumption and wealth: common and idiosyncratic effects," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(1), pages 21-34, April.
    6. Sousa, Ricardo M., 2009. "Wealth effects on consumption: evidence from the euro area," Working Paper Series 1050, European Central Bank.
    7. Amine Ben Amar, 2022. "On the role of Islamic banks in the monetary policy transmission in Saudi Arabia," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 55-94, March.
    8. Beatrice D. Simo-Kengne & Stephen M. Miller & Rangan Gupta & Goodness C. Aye, 2013. "Time-Varying Effects of Housing and Stock Prices on U.S. Consumption," Working Papers 201325, University of Pretoria, Department of Economics.
    9. Nicholas Apergis & Beatrice Simo-Kengne & Rangan Gupta, 2014. "The Long-Run Relationship Between Consumption, House Prices, and Stock Prices in South Africa: Evidence from Provincial-level Data," Journal of Real Estate Literature, Taylor & Francis Journals, vol. 22(1), pages 83-99, January.
    10. Christian Gillitzer & Jin Cong Wang, 2015. "Housing Wealth Effects: Cross-sectional Evidence from New Vehicle Registrations," RBA Research Discussion Papers rdp2015-08, Reserve Bank of Australia.
    11. Sousa, Ricardo M., 2010. "Consumption, (dis)aggregate wealth, and asset returns," Journal of Empirical Finance, Elsevier, vol. 17(4), pages 606-622, September.
    12. Ashley, Richard & Li, Guo, 2014. "Re-examining the impact of housing wealth and stock wealth on retail sales: Does persistence in wealth changes matter?," Journal of Housing Economics, Elsevier, vol. 26(C), pages 109-118.
    13. Richard A. Ashley & Kwok Ping Tsang, 2013. "International Evidence On The Oil Price-Real Output Relationship: Does Persistence Matter?," Working Papers e07-42, Virginia Polytechnic Institute and State University, Department of Economics.
    14. Ludwig Alexander & Sløk Torsten, 2004. "The Relationship between Stock Prices, House Prices and Consumption in OECD Countries," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-28, March.
    15. Simone Salotti, 2012. "Wealth Effects in the US: Evidence from the Combination of Two Surveys," The Economic and Social Review, Economic and Social Studies, vol. 43(1), pages 67-98.
    16. David M. Williams, 2010. "Consumption, wealth and credit liberalisation in Australia," Economics Series Working Papers 492, University of Oxford, Department of Economics.
    17. Georgios Bampinas & Panagiotis Konstantinou & Theodore Panagiotidis, 2017. "Inequality, Demographics and the Housing Wealth Effect: Panel Quantile Regression Evidence for the US States," Working Paper series 17-01, Rimini Centre for Economic Analysis.
    18. Paul Frijters & Benno Torgler & Christian Gillitzer & Jin Cong Wang, 2016. "Housing Wealth Effects: Cross-sectional Evidence from New Vehicle Registrations," The Economic Record, The Economic Society of Australia, vol. 92, pages 30-51, June.
    19. Ebner, André, 2013. "A micro view on home equity withdrawal and its determinants: Evidence from Dutch households," Journal of Housing Economics, Elsevier, vol. 22(4), pages 321-337.
    20. Cohen, Lior, 2023. "The effects of the BoJ's ETF purchases on equities and corporate investment," Economic Modelling, Elsevier, vol. 129(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:13:y:2006:i:3:p:189-193. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.