Non-Durable Consumption and Housing Net Worth in the Great Recession: Evidence from Easily Accessible Data

21 Pages Posted: 28 Sep 2017

See all articles by Greg Kaplan

Greg Kaplan

University of Chicago - Department of Economics

Kurt Mitman

IIES

Giovanni L. Violante

New York University, Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: April 30, 2016

Abstract

In an influential paper, Mian, Rao, and Sufi (2013) exploit geographic variation in housing supply elasticities to measure the effect of changes in the housing share of net worth on total household expenditures during the Great Recession. Their widely-cited estimates are based on proprietary house price data, and use new vehicle registrations as the main proxy for total spending. We revisit their study using different, publicly available data on house prices, and an easily-accessible proxy for expenditures in non-durable goods. We re-affirm their findings in our data, and refine their analysis in several dimensions: (i) we separate the roles of falling house prices and initial leverage; (ii) we distinguish the effects on real consumption versus nominal expenditures; and (iii) we infer the implied elasticity of total non-durable expenditures in goods and services to housing net worth.

Keywords: Non-Durable Expenditures, House Prices, Consumption, Great Recession

JEL Classification: E21, E32, R21

Suggested Citation

Kaplan, Greg and Mitman, Kurt and Violante, Giovanni L., Non-Durable Consumption and Housing Net Worth in the Great Recession: Evidence from Easily Accessible Data (April 30, 2016). Kreisman Working Papers Series in Housing Law and Policy No. 44. Available at SSRN: https://ssrn.com/abstract=3043478 or http://dx.doi.org/10.2139/ssrn.3043478

Greg Kaplan (Contact Author)

University of Chicago - Department of Economics ( email )

1126 E. 59th St
Chicago, IL 60637
United States

Kurt Mitman

IIES ( email )

Stockholm, SE-10691
Sweden

HOME PAGE: http://kurtmitman.com

Giovanni L. Violante

New York University, Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States
212-992-9771 (Phone)
212-995-4186 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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