Housing Wealth Effects: Cross‐Sectional Evidence from New Vehicle Registrations

22 Pages Posted: 9 Jun 2016

See all articles by Christian Gillitzer

Christian Gillitzer

Reserve Bank of Australia

Jin Cong Wang

Reserve Bank of Australia

Date Written: June 2016

Abstract

We investigate the relationship between housing wealth and consumption using postcode‐level variation in house prices and administrative data on new passenger vehicle registrations as a proxy for consumption. We find a robust cross‐sectional relationship, and in our preferred specification estimate an elasticity of new passenger vehicle registrations with respect to gross housing wealth of 0.4-0.5, which based on our preferred calibration implies a marginal propensity to consume for total consumption of less than 0.5 cents. Notably, we find evidence that the relationship between house prices and new vehicle registrations is heterogeneous in income.

Suggested Citation

Gillitzer, Christian and Wang, Jin Cong, Housing Wealth Effects: Cross‐Sectional Evidence from New Vehicle Registrations (June 2016). Economic Record, Vol. 92, pp. 30-51, 2016. Available at SSRN: https://ssrn.com/abstract=2791813 or http://dx.doi.org/10.1111/1475-4932.12277

Christian Gillitzer (Contact Author)

Reserve Bank of Australia ( email )

65, Martin Place
Sydney, NSW 2000
Australia

Jin Cong Wang

Reserve Bank of Australia

65, Martin Place
Sydney, 2000
Australia

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