Comparing Wealth Effects: The Stock Market Versus the Housing Market

Case, Karl E.; Shiller, Robert J.; Quigley, John M.

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Comparing Wealth Effects: The Stock Market Versus the Housing Market

NBER Working Paper No. w8606

30 Pages Posted: 17 Nov 2001 Last revised: 9 Jul 2022

See all articles by Karl E. Case

Robert J. Shiller

Yale University - Cowles Foundation; National Bureau of Economic Research (NBER); Yale University - International Center for Finance

John M. Quigley

University of California, Berkeley, College of Letters & Science, Department of Economics (Deceased); University of California, Berkeley, Haas School of Business, Real Estate Group (Deceased)

There are 2 versions of this paper

Date Written: November 2001

Abstract

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.

Suggested Citation: Suggested Citation

Case, Karl E. and Shiller, Robert J. and Quigley, John M., Comparing Wealth Effects: The Stock Market Versus the Housing Market (November 2001). NBER Working Paper No. w8606, Available at SSRN: https://ssrn.com/abstract=291281