Housing Wealth Effect on Personal Consumption: Empirical Evidence from European Post-Transition Economies
Year: 2014 Volume: 64 Issue: 5 Pages: 392-406
Abstract: Since housing is the most important component of non-financial personal wealth in most countries and in European post-transition economies in particular, this study estimates the impact of changes in the housing wealth effect on personal consumption in the long-run and the short-run in light of the permanent income hypothesis. In order to asses this relationship empirically, a pooled mean group estimator of dynamic heterogeneous panel data on a sample of six European post-transition economies, namely Bulgaria, Croatia, the Czech Republic, Estonia, Lithuania and Slovenia, was used. The panel was unbalanced with the longest time span for Estonia, ranging from the first quarter of 1997 to the third quarter of 2012. The main result of the analysis is the statistically significant long-run and short-run housing wealth effect in the analyzed economies, with the latter being less pronounced than the former, though these results are somewhat sensitive to the choice of estimation method.
JEL classification: C33, D12, E21, R31
Keywords: personal consumption, life-cycle hypothesis, housing wealth, panel cointegration, European post-transition economies
RePEc: http://ideas.repec.org/a/fau/fauart/v64y2014i5p392-406.html
 Attachment [PDF] |  Print  Recommend to others |
