2014/10/29 by Kadir Atalay, Stephen Whelan, Judith Yates · 1 citation
Economics, Econometrics and Finance · Business, Management and Accounting · #Housing Market and Economics #Financial Literacy, Pension, Retirement Analysis #Fiscal Policy and Economic Growth
paper · doi:10.1111/roiw.12145
Over the past two decades, a number of countries have experienced appreciation in house prices at the same time that aggregate consumption has increased. This paper tests alternative hypotheses for this phenomenon by using repeated household surveys from A ustralia and C anada to identify the transmission mechanism that links consumption and household wealth. The empirical analysis suggests that neither a direct wealth effect nor a common causal factor likely accounts for the observed correlation between wealth and consumption in these two countries. Rather, indirect factors such as collateral effects arising from relaxation of credit constraints are a more likely explanation.