NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Wealth Effects Revisited 1978-2009

Karl E. Case, John M. Quigley, Robert J. Shiller

NBER Working Paper No. 16848
Issued in March 2011
NBER Program(s):   EFG

We re-examine the link between changes in housing wealth, financial wealth, and consumer spending. We extend a panel of U.S. states observed quarterly during the seventeen-year period, 1982 through 1999, to the thirty-one year period, 1978 through 2009. Using techniques reported previously, we impute the aggregate value of owner-occupied housing, the value of financial assets, and measures of aggregate consumption for each of the geographic units over time. We estimate regression models in levels, first differences and in error-correction form, relating per capita consumption to per capita income and wealth. We find a statistically significant and rather large effect of housing wealth upon household consumption. This effect is consistently larger than the effect of stock market wealth upon consumption. This reinforces the conclusions reported in our previous analysis.

In contrast to our previous analysis, however, we do find – based on data which include the recent volatility in asset markets – that the effects of declines in housing wealth in reducing consumption are at least as large as the effects of increases in housing wealth in increasing the course of household consumption.

download in pdf format
   (245 K)

email paper

This paper is available as PDF (245 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16848

Users who downloaded this paper also downloaded these:
Case, Shiller, and Quigley w8606 Comparing Wealth Effects: The Stock Market Versus the Housing Market
Calomiris, Longhofer, and Miles w15075 The (Mythical?) Housing Wealth Effect
Case, Quigley, and Shiller w18667 Wealth Effects Revisited: 1975-2012
Case, Shiller, and Thompson w18400 What Have They Been Thinking? Home Buyer Behavior in Hot and Cold Markets
Campbell, Shiller, and Viceira w15014 Understanding Inflation-Indexed Bond Markets
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us