Premium
Housing Wealth Effects: Evidence from an Australian Panel
Author(s) -
Windsor Callan,
Jääskelä Jarkko P.,
Finlay Richard
Publication year - 2015
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/ecca.12137
Subject(s) - panel data , house price , economics , consumption (sociology) , demographic economics , cohort effect , labour economics , wealth effect , consumer spending , cohort , monetary economics , macroeconomics , econometrics , monetary policy , medicine , social science , recession , sociology
We explore the positive relationship between house prices and household spending by following a panel of Australian households. No evidence for ‘traditional housing wealth effects' is found, with young homeowners exhibiting the largest wealth effects. Young renters also exhibit a positive consumption response to house prices, although less so than young homeowners. This suggests that increasing house prices raise spending via easing credit constraints and a common association between house prices and a third factor. Results from a cohort‐level panel are similar to those using household‐level data, suggesting that ‘pseudo‐panels' may be used as a partial substitute for actual panels.