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http://ssrn.com/abstract=1656123
 
 

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Evidence on the Relationship between Housing and Consumption in the US: A State-Level Analysis


Chadi S. Abdallah


Miami University - Farmer School of Business - Department of Economics

William D. Lastrapes


University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

June 15, 2012

Journal of Money, Credit, and Banking, Forthcoming

Abstract:     
We estimate the dynamic effects of aggregate US housing market shocks on state-level retail sales and home prices from 1976 to 2008. We use a common factor VAR model to account for the dynamics of the state-level variables, and identify housing demand and supply shocks using a signs-restriction approach. We find that local spending and real house prices generally respond positively but with a lag to aggregate housing demand shocks, that these responses vary significantly across states, and that differences in the level of mortgage market development most likely explain this variation.

Number of Pages in PDF File: 42

Keywords: Housing wealth, houe prices, retail sales, collateral, FAVAR

JEL Classification: E20, E21, C32

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Date posted: August 10, 2010 ; Last revised: March 8, 2013

Suggested Citation

Abdallah, Chadi S. and Lastrapes, William D., Evidence on the Relationship between Housing and Consumption in the US: A State-Level Analysis (June 15, 2012). Journal of Money, Credit, and Banking, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1656123 or http://dx.doi.org/10.2139/ssrn.1656123

Contact Information

Chadi S. Abdallah
Miami University - Farmer School of Business - Department of Economics ( email )
Oxford, OH 45056
United States
513-529-2843 (Phone)
William D. Lastrapes (Contact Author)
University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )
Terry College of Business
Athens, GA 30602-6254
United States
706-542-3569 (Phone)
706-542-3376 (Fax)
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