Comparing Wealth Effects: The Stock Market Versus the Housing Market

30 Pages Posted: 17 Nov 2001  

Karl E. Case

Wellesley College

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)

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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

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

Karl E. Case (Contact Author)

Wellesley College ( email )

106 Central Street
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Robert J. Shiller

National Bureau of Economic Research (NBER) ( email )

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Yale University - International Center for Finance ( email )

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Yale University - Cowles Foundation ( email )

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203-432-3708 (Phone)
203-432-6167 (Fax)

HOME PAGE: http://www.econ.yale.edu/~shiller/

John M. Quigley

University of California, Berkeley, College of Letters & Science, Department of Economics (Deceased) ( email )

Berkeley, CA 94720-3880
United States
510-643-7411 (Phone)
510-643-7357 (Fax)

University of California, Berkeley, Haas School of Business, Real Estate Group (Deceased) ( email )

Berkeley, CA 94720-1900
United States

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