The (mythical?) Housing Wealth Effect

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ISBN 13 :
Total Pages : 29 pages
Book Rating : 4.:/5 (12 download)

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Book Synopsis The (mythical?) Housing Wealth Effect by : Charles W. Calomiris

Download or read book The (mythical?) Housing Wealth Effect written by Charles W. Calomiris and published by . This book was released on 2009 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Models used to guide policy, as well as some empirical studies, suggest that the effect of housing wealth on consumption is large and greater than the wealth effect on consumption from stock holdings. Recent theoretical work, in contrast, argues that changes in housing wealth are offset by changes in housing consumption, meaning that unexpected shocks in housing wealth should have little effect on non-housing consumption. We reexamine the impact of housing wealth on non-housing consumption, employing the Case-Quigley-Shiller data on U.S. housing wealth that have been used in prior studies to estimate a large housing wealth effect. Existing empirical work fails to control for the fact that changes in housing wealth may be correlated with changes in expected permanent income, biasing the resulting estimates. Once we control for the endogeneity bias resulting from the correlation between housing wealth and permanent income, we find that housing wealth has a small and insignificant effect on consumption. Additional analysis of time-series results provides further support for that view.

The (Mythical?

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ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (756 download)

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Book Synopsis The (Mythical? by :

Download or read book The (Mythical? written by and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Models used to guide policy, as well as some empirical studies, suggest that the effect of housing wealth on consumption is large and greater than the wealth effect on consumption from stock holdings. Recent theoretical work, in contrast, argues that changes in housing wealth are offset by changes in housing consumption, meaning that unexpected shocks in housing wealth should have little effect on non-housing consumption. We reexamine the impact of housing wealth on non-housing consumption, employing the Case-Quigley-Shiller data on U.S. housing wealth that have been used in prior studies to estimate a large housing wealth effect. Existing empirical work fails to control for the fact that changes in housing wealth may be correlated with changes in expected permanent income, biasing the resulting estimates. Once we control for the endogeneity bias resulting from the correlation between housing wealth and permanent income, we find that housing wealth has a small and insignificant effect on consumption. Additional analysis of time-series results provides further support for that view.

How Large is the Housing Wealth Effect?

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ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.3/5 ( download)

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Book Synopsis How Large is the Housing Wealth Effect? by : Chris Carroll

Download or read book How Large is the Housing Wealth Effect? written by Chris Carroll and published by . This book was released on 2006 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a simple new method for estimating the size of 'wealth effects' on aggregate consumption. The method exploits the well-documented sluggishness of consumption growth (often interpreted as 'habits' in the asset pricing literature) to distinguish between short-run and long-run wealth effects. In U.S. data, we estimate that the immediate (next-quarter) marginal propensity to consume from a $1 change in housing wealth is about 2 cents, with a final long-run effect around 9 cents. Consistent with several recent studies, we find a housing wealth effect that is substantially larger than the stock wealth effect. We believe that our approach is preferable to the currently popular cointegration- based estimation methods, because neither theory nor evidence justifies faith in the existence of a stable cointegrating vector.

Housing Wealth Effects

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ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (16 download)

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Book Synopsis Housing Wealth Effects by : Adam M. Guren

Download or read book Housing Wealth Effects written by Adam M. Guren and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide new, time-varying estimates of the housing wealth effect back to the 1980s. We exploit systematic differences in city-level exposure to regional house price cycles to instrument for house prices. Our main findings are that: 1) Large housing wealth effects are not new: we estimate substantial effects back to the mid 1980s; 2) Housing wealth effects were not particularly large in the 2000s; if anything, they were larger prior to 2000; and 3) There is no evidence of a boom-bust asymmetry. We compare these findings to the implications of a standard life-cycle model with borrowing constraints, uninsurable income risk, illiquid housing, and long-term mortgages. The model explains our empirical findings about the insensitivity of the housing wealth effects to changes in the loan-to-value (LTV) distribution, including the dramatic rise in LTVs in the Great Recession. The insensitivity arises in the model for two reasons. First, impatient low-LTV agents have a high elasticity. Second, a rightward shift in the LTV distribution increases not only the number of highly sensitive constrained agents but also the number of underwater agents whose consumption is insensitive to house prices.

Housing Wealth Effects

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ISBN 13 :
Total Pages : 62 pages
Book Rating : 4.F/5 ( download)

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Book Synopsis Housing Wealth Effects by : Eric S. Belsky

Download or read book Housing Wealth Effects written by Eric S. Belsky and published by . This book was released on 2004 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Housing Wealth Effect on Consumption Reconsidered

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ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (118 download)

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Book Synopsis The Housing Wealth Effect on Consumption Reconsidered by : Fabian Lindner

Download or read book The Housing Wealth Effect on Consumption Reconsidered written by Fabian Lindner and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Housing Wealth Effect

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ISBN 13 :
Total Pages : 55 pages
Book Rating : 4.:/5 (773 download)

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Book Synopsis The Housing Wealth Effect by : Charles W. Calomiris

Download or read book The Housing Wealth Effect written by Charles W. Calomiris and published by . This book was released on 2012 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Current estimates of housing wealth effects vary widely. We consider the role of omitted variables suggested by economic theory that have been absent in a number of prior studies. Our estimates take into account age composition and wealth distribution (using poverty rates as a proxy), as well as wealth shares (how much of total wealth is comprised of housing vs. stock wealth). We exploit cross-state variation in housing, stock wealth and other variables in a newly assembled panel data set and find that the impact of housing on consumer spending depends crucially on age composition, poverty rates, and the housing wealth share. In particular, young people who are more likely to be credit-constrained, and older homeowners, likely to be "trading down" on their housing stock, experience the largest housing wealth effects, as suggested by theory. Also, as suggested by theory, housing wealth effects are higher in state-years with higher housing wealth shares, and in state-years with higher poverty rates (likely reflecting the greater importance of credit constraints for those observations). Taking these various factors into account implies huge variation over time and across states in the size of housing wealth effects"--National Bureau of Economic Research web site

Housing Wealth Effects and the Course of the US Economy

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ISBN 13 :
Total Pages : 30 pages
Book Rating : 4.:/5 (34 download)

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Book Synopsis Housing Wealth Effects and the Course of the US Economy by : Eric S. Belsky

Download or read book Housing Wealth Effects and the Course of the US Economy written by Eric S. Belsky and published by . This book was released on 2008 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Housing Wealth Effect

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ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis The Housing Wealth Effect by : Roine Vestman

Download or read book The Housing Wealth Effect written by Roine Vestman and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Empirical studies have estimated a big range of consumption response sizes to changes in house prices. Using a quasi-experiment, we estimate a shock of -19.4 percent to house prices in the area surrounding an airport in Stockholm after its operations were unexpectedly continued as a result of political bargaining behind closed doors. This source of price divergence is ideal for identifying housing wealth effects since it is local and unrelated to variations in macroeconomic conditions. Using a household data set with information on the location of primary residence relative to the airport, we find a short-run elasticity with respect to new car purchases of 0.39, corresponding to a one-year marginal propensity for car expenditures of 0.12 cents per dollar lost in housing wealth. Households with high loan-to-value ratios and little bank deposits respond the most. A quantitative model is consistent with the empirical findings and pinpoints important determinants of the response size, which may explain the variation in previous estimates.

The Housing Wealth Effect

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ISBN 13 :
Total Pages : 76 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis The Housing Wealth Effect by : Dany Kessel

Download or read book The Housing Wealth Effect written by Dany Kessel and published by . This book was released on 2019 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: We exploit a quasi-experiment to provide new evidence on the magnitude of the housing wealth effect. We estimate an immediate shock of approximately $-$15% to house prices close to one of Stockholm's airports after its operations were unexpectedly continued. This source of price variation is ideal for identifying housing wealth effects since it is unrelated to macroeconomic conditions. We estimate a micro elasticity of 0.45 among purchasers of new cars. The implied aggregate MPC on cars is however only 0.13 cents per dollar. The response is entirely concentrated to homeowners with a loan-to-value ratio between 0.6 and 0.8.

Housing Wealth Isn't Wealth

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ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (12 download)

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Book Synopsis Housing Wealth Isn't Wealth by : Willem H. Buiter

Download or read book Housing Wealth Isn't Wealth written by Willem H. Buiter and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: A fall in house prices due to a change in fundamental value redistributes wealth from those long housing (for whom the fundamental value of the house they own exceeds the present discounted value of their planned future consumption of housing services) to those short housing. In a representative agent model and in the Yaari-Blanchard OLG model used in the paper, there is no pure wealth effect on consumption from a change in house prices if this represents a change in fundamental value. There is a pure wealth effect on consumption from a change in house prices if this reflects a change in the speculative bubble component of house prices. Two other channels through which house prices can affect aggregate consumption are (1) redistribution effects if the marginal propensity to spend out of wealth differs between those long housing and those short housing and (2) collateral or credit effects due to the collateralisability of housing wealth and the non-collateralisability of human wealth. A decline in house prices reduces the scope for mortgage equity withdrawal. For given sequences of future after-tax labour income and interest rates, this may depress consumption in the short run while boosting it in the long run.

Comparing Wealth Effects

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ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Comparing Wealth Effects by : Karl E. Case

Download or read book Comparing Wealth Effects written by Karl E. Case and published by . This book was released on 2003 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the link between increases in housing wealth, financial wealth, and consumer spending. We rely upon a panel of 14 countries observed annually for various periods during the past 25 years and a panel of U.S. states observed quarterly during the 1980s and 1990s. 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 regressions relating consumption to income and wealth measures, finding a statistically significant and rather large effect of housing wealth upon household consumption.

Financial Market and Housing Wealth Effects on Consumption

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ISBN 13 :
Total Pages : 30 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Financial Market and Housing Wealth Effects on Consumption by : Arnold C S. Cheng

Download or read book Financial Market and Housing Wealth Effects on Consumption written by Arnold C S. Cheng and published by . This book was released on 2008 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: The objective of this study is to examine the financial market and housing wealth effects on consumption. Housing has the dual functions as both a commodity yielding a flow of housing services and an investment asset yielding a flow of capital income. The findings from this study suggest that a rise in housing price has both a positive wealth effect and a negative price effect on consumption. While the positive wealth effect is caused by an increase in capital income, the negative price effect is caused by an increase in the cost of housing services. In addition, the housing market wealth effect increases, at the expense of the price effect, with the levels of leverage and homeownership of the housing market. These findings imply that the government policy of land supply aiming to stimulate the economy should strike a balance between the possible wealth and price effects of the housing market.

Elgar Encyclopedia of Post-Keynesian Economics

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Publisher : Edward Elgar Publishing
ISBN 13 : 1788973933
Total Pages : 475 pages
Book Rating : 4.7/5 (889 download)

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Book Synopsis Elgar Encyclopedia of Post-Keynesian Economics by : Louis-Philippe Rochon

Download or read book Elgar Encyclopedia of Post-Keynesian Economics written by Louis-Philippe Rochon and published by Edward Elgar Publishing. This book was released on 2023-01-13 with total page 475 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Encyclopedia is an invaluable reference book for post-Keynesian and heterodox economics. It consists of 300 entries, written by 180 different authors. The volume includes entries on key concepts of interest to post-Keynesians as well as descriptions of some of the seminal books in the post-Keynesian tradition. It will interest both students and scholars of heterodox economics, as well as policy makers around the world looking for a better alternative to mainstream economic policies at national and international levels in the aftermath of the global financial crisis that burst in 2008 and the COVID-19 pandemic crisis that began in 2020.

Real Estate Economics

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Publisher : Routledge
ISBN 13 : 0415676347
Total Pages : 514 pages
Book Rating : 4.4/5 (156 download)

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Book Synopsis Real Estate Economics by : Nicholas G. Pirounakis

Download or read book Real Estate Economics written by Nicholas G. Pirounakis and published by Routledge. This book was released on 2013 with total page 514 pages. Available in PDF, EPUB and Kindle. Book excerpt: Real Estate Economics: A point-to-point handbook introduces the main tools and concepts of real estate (RE) economics. It covers areas such as the relation between RE and the macro-economy, RE finance, investment appraisal, taxation, demand and supply, development, market dynamics and price bubbles, and price estimation. It balances housing economics with commercial property economics, and pays particular attention to the issue of property dynamics and bubbles – something very topical in the aftermath of the US house-price collapse that precipitated the global crisis of 2008. This textbook takes an international approach and introduces the student to the necessary ‘toolbox’ of models required in order to properly understand the mechanics of real estate. It combines theory, technique, real-life cases, and practical examples, so that in the end the student is able to: • read and understand most RE papers published in peer-reviewed journals; • make sense of the RE market (or markets); and • contribute positively to the preparation of economic analyses of RE assets and markets soon after joining any company or other organization involved in RE investing, appraisal, management, policy, or research. This book should be particularly useful to third-year students of economics who may take up RE or urban economics as an optional course, to postgraduate economics students who want to specialize in RE economics, to graduates in management, business administration, civil engineering, planning, and law who are interested in RE, as well as to RE practitioners and to students reading for RE-related professional qualifications.

Has the Effect of Housing Wealth on Household Consumption Been Overestimated? New Evidences on Magnitude and Allocation

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ISBN 13 :
Total Pages : 27 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Has the Effect of Housing Wealth on Household Consumption Been Overestimated? New Evidences on Magnitude and Allocation by : Linna Zhu

Download or read book Has the Effect of Housing Wealth on Household Consumption Been Overestimated? New Evidences on Magnitude and Allocation written by Linna Zhu and published by . This book was released on 2019 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: The effect of housing wealth on household consumption is puzzling as existing empirical results do not match with theoretical predictions. Existing theories - life cycle theory, permanent income hypothesis and user cost model - suggest that housing wealth impact should be small. However, most prior studies find that Marginal Propensity to Consume (MPC) out of housing wealth ranges between 0.04 to 0.09, indicating material impact of housing wealth on household consumption. Motivated by this discordance, this study uses the Panel Study of Income Dynamics to provide a step by step analysis to show how the housing wealth effect decreases as biases from unobserved variables are properly addressed. Once households' unobserved preferences towards consumption and their future expected income are controlled for, our estimated MPC drops significantly. We also directly control for home equity extraction to disentangle the pure wealth effect channel and the collateral channel. Our findings show that a one percent increase in perceived housing wealth is associated with 0.01-0.02 percent increase in real, non-housing consumption after directly controlling for the collateral channel. Our estimated magnitude of housing wealth effect is much smaller than previous findings. Additionally, we find heterogeneity in MPCs across consumption categories - consumptions that are necessary in daily lives such as food and transportation do not respond to changes in perceived housing wealth while households increase their spending on clothes and recreation as housing wealth increases. We also employ an IV approach to disentangle permanent and transitory housing wealth shocks. Our results indicate that it is the deviation between perceived house price appreciation rate and the real house price appreciation rate in fundamental values that drives this small magnitude of MPC out of housing wealth in the short run (in cloth and recreation) and this housing wealth effect will move towards to zero in the long run as the perception converges with the fundamental values.

Housing Wealth Effects

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ISBN 13 :
Total Pages : 96 pages
Book Rating : 4.:/5 (245 download)

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Book Synopsis Housing Wealth Effects by : Evelyn Gatawa

Download or read book Housing Wealth Effects written by Evelyn Gatawa and published by . This book was released on 2008 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt: