Housing Wealth, Stock Market Wealth and Consumption: A Panel Analysis for Australia

14 Pages Posted: 10 Jun 2007

See all articles by Nikola Dvornak

Nikola Dvornak

Commonwealth Bank of Australia - Commonwealth Securities Ltd.

Marion Kohler

Bank for International Settlements (BIS)

Abstract

Using a panel of Australian States, we estimate how changes in household wealth affect consumption expenditure. Both housing and stock market wealth have a significant effect on consumption: a permanent $A1 increase in stock market wealth increases long-run annual consumption by 69 cents; the same increase in housing wealth increases annual consumption by around 3 cents. With households' housing assets more than three times that of stock market assets, a 1 per cent increase in housing wealth has an effect on consumption at least as large as that of a 1 per cent increase in stock market wealth.

Suggested Citation

Dvornak, Nikola and Kohler, Marion, Housing Wealth, Stock Market Wealth and Consumption: A Panel Analysis for Australia. Economic Record, Vol. 83, No. 261, pp. 117-130, June 2007, Available at SSRN: https://ssrn.com/abstract=991985 or http://dx.doi.org/10.1111/j.1475-4932.2007.00388.x

Nikola Dvornak

Commonwealth Bank of Australia - Commonwealth Securities Ltd.

Level 6
120 Pitt St
Sydney NSW, 2000
Australia

Marion Kohler (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

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