The housing wealth effect: Quasi-experimental evidence

Arbeitspapier

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 as a result of political bargaining. This source of price variation is ideal to identify housing wealth effects since it is local and unrelated to variation in macroeconomic conditions. Using a household data set with granular geographic information on location of primary residence, we find an elasticity of 0.45 among purchasers of new cars. Converting our estimate to an aggregate MPC on cars, it is however only 0.13 cents per dollar. The MPC is entirely concentrated to homeowners with a combined loan-to-value ratio between 0.6 and 0.8 which, on the one hand, confirms the key role of household balance sheets but on the other hand refutes a monotone relationship between response and household leverage

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IFN Working Paper ; No. 1262

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Consumer Economics: Empirical Analysis ; Macroeconomics: Consumption; Saving; Wealth ; Business Fluctuations; Cycles ; Financial Markets and the Macroeconomy ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
• Thema: House prices ; Housing wealth ; Consumption ; House price elasticity ; Marginal propensity to consume ; Collateral effect

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Kessel, Dany ; Tyrefors, Björn ; Vestman, Roine
• Ereignis: Veröffentlichung
• (wer): Research Institute of Industrial Economics (IFN)
• (wo): Stockholm
• (wann): 2019

Weitere Informationen

• Handle: http://hdl.handle.net/10419/210903
• Letzte Aktualisierung: 20.09.2024, 08:25 MESZ