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Housing Wealth, Stock Market Wealth and Consumption: A Panel Analysis for Australia*
Author(s) -
DVORNAK NIKOLA,
KOHLER MARION
Publication year - 2007
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2007.00388.x
Subject(s) - wealth effect , stock (firearms) , economics , stock market , consumption (sociology) , national wealth , labour economics , monetary economics , finance , mechanical engineering , monetary policy , paleontology , social science , horse , sociology , biology , engineering
Using a panel of Australian States, we estimate how changes in household wealth affect consumption expenditure. Both housing and stock market wealth have a significant effect on consumption: a permanent $A1 increase in stock market wealth increases long‐run annual consumption by 6–9 cents; the same increase in housing wealth increases annual consumption by around 3 cents. With households’ housing assets more than three times that of stock market assets, a 1 per cent increase in housing wealth has an effect on consumption at least as large as that of a 1 per cent increase in stock market wealth.