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Real estate market and consumption: macro and micro evidence of Japan

In: Handbook of Real Estate and Macroeconomics

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  • Kazuo Ogawa

Abstract

This study is an empirical investigation into the relationship between the real estate market and consumption in Japan. The purpose of this study is twofold. First, we investigate the channel through which the performance of the real estate market affects consumption. Using the quarterly time series data, we estimate the VAR model to pin down the transmission mechanism of land price to consumption. We find that collateral channel played an important role in propagating a shock in land price to consumption in the bubble period and the lost decades. Second, we estimate the effect of housing wealth on consumption, using the panel data of the Japan Household Panel Survey from 2009 to 2017. We find that collateral channel is still at work for young households. Our estimates of marginal propensity to consume out of housing wealth is 0.0097 to 0.0146, slightly larger than the estimates in the previous studies.

Suggested Citation

  • Kazuo Ogawa, 2022. "Real estate market and consumption: macro and micro evidence of Japan," Chapters, in: Charles K.Y. Leung (ed.), Handbook of Real Estate and Macroeconomics, chapter 1, pages 2-20, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:19335_1
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    Keywords

    Asian Studies; Economics and Finance; Urban and Regional Studies;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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