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Household Reaction to Changes in Housing Wealth
Robert J. Shiller Yale University - Cowles Foundation; National Bureau of Economic Research (NBER); Yale University - International Center for Finance April 2004 Cowles Foundation Discussion Paper No. 1459 Abstract: It is widely claimed that housing wealth, as well as stock prices, have an impact on consumption and hence on aggregate economic activity. This paper presents a broad overview of the issues that arise in evaluating this claim in the context of recent research in behavioral economics. Particular attention is paid to a model of the response of consumption to wealth components produced by Christopher Carroll [2004].
Keywords: Wealth effect, home prices, stock prices, consumption, saving, life cycle theory, interest rates, inflation, bubble JEL Classifications: E21 Working Paper SeriesDate posted: April 30, 2004 ; Last revised: April 30, 2004Suggested CitationContact Information
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