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New models for South African consumption, house prices, and mortgage and non-mortgage debt: Insights for financial stability and monetary transmission

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Listed:
  • Janine Aron
  • John Muellbauer

Abstract

Aggregate consumption typically exceeds 60 per cent of GDP and should be pivotal in central bank policy models. Most use semi-structural macro-models, yet consumption is usually inadequately specified. We use a systems approach to estimate new equations for South African consumption, house prices, mortgage and non-mortgage debt, and income forecasting. A credit-augmented consumption function approach introduces a greater role for uncertainty and a key role for credit conditions, and varies the spendability of different wealth components.

Suggested Citation

  • Janine Aron & John Muellbauer, 2025. "New models for South African consumption, house prices, and mortgage and non-mortgage debt: Insights for financial stability and monetary transmission," WIDER Working Paper Series wp-2025-8, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2025-8
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    References listed on IDEAS

    as
    1. Deaton, Angus, 1991. "Saving and Liquidity Constraints," Econometrica, Econometric Society, vol. 59(5), pages 1221-1248, September.
    2. Janine Aron & John Muellbauer, 2006. "Estimates Of Household Sector Wealth For South Africa, 1970–2003," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(2), pages 285-307, June.
    3. Meen, Geoffrey P, 1990. "The Measurement of Rationing and the Treatment of Structural Change in the UK Mortgage Market," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(2), pages 167-187, April-Jun.
    4. Saul Pleeter & John T. Warner, 2001. "The Personal Discount Rate: Evidence from Military Downsizing Programs," American Economic Review, American Economic Association, vol. 91(1), pages 33-53, March.
    5. Shaun de Jager & Riaan Ehlers & Keabetswe Mojapelo & Pieter Pienaar, 2021. "Shortterm impacts and interaction of macroprudential policy tools," Working Papers 11020, South African Reserve Bank.
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