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Consumption Dynamics and a Home Purchase

Author

Listed:
  • Dongjae Jung

    (Economic Research Institute, Bank of Korea)

Abstract

This paper investigates the effects of a home purchase, which is one type of durable expenditure, on changes in non-durable consumption at the household level. The results suggest that there is a break on the consumption path at the time of a home purchase; non-durable consumption in the after-period of a home purchase is 5.2% higher than the before-period. The results propose an extra path that connects the two cycles of housing markets and consumption by suggesting that home purchases trigger not only additional home-related durable spendings, but also release delayed consumption.

Suggested Citation

  • Dongjae Jung, 2020. "Consumption Dynamics and a Home Purchase," Working Papers 2020-27, Economic Research Institute, Bank of Korea.
    • Handle: RePEc:bok:wpaper:2027
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    File URL: https://www.bok.or.kr/ucms/cmmn/file/fileDown.do?menuNo=500789&atchFileId=FILE_000000000020872&fileSn=1
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    References listed on IDEAS

    as
    1. Efraim Benmelech & Adam Guren & Brian T Melzer & Stijn Van, 2023. "Making the House a Home: The Stimulative Effect of Home Purchases on Consumption and Investment," The Review of Financial Studies, Society for Financial Studies, vol. 36(1), pages 122-154.
    2. Krumm, Ronald & Kelly, Austin, 1989. "Effects of homeownership on household savings," Journal of Urban Economics, Elsevier, vol. 26(3), pages 281-294, November.
    3. Ben Jann, 2014. "Plotting regression coefficients and other estimates," Stata Journal, StataCorp LP, vol. 14(4), pages 708-737, December.
    4. Artle, Roland & Varaiya, Pravin, 1978. "Life cycle consumption and homeownership," Journal of Economic Theory, Elsevier, vol. 18(1), pages 38-58, June.
    5. Ben Jann, 2014. "A new command for plotting regression coefficients and other estimates," German Stata Users' Group Meetings 2014 09, Stata Users Group.
    6. Michael Carlos Best & Henrik Jacobsen Kleven, 2018. "Housing Market Responses to Transaction Taxes: Evidence From Notches and Stimulus in the U.K," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(1), pages 157-193.
    7. Orazio P. Attanasio, 2000. "Consumer Durables and Inertial Behaviour: Estimation and Aggregation of (S, s) Rules for Automobile Purchases," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 667-696.
    8. Jappelli, Tullio & Pistaferri, Luigi, 2017. "The Economics of Consumption: Theory and Evidence," OUP Catalogue, Oxford University Press, number 9780199383153.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Consumption; Home Purchase;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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