TY  - UNPD
A1  - Carroll, Christopher D.
A1  - Otsuka, Misuzu
A1  - Slacalek, Jirka
T1  - How large is the housing wealth effect? : a new approach
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2006,35
N2  - This paper presents a simple new method for estimating the size of ‘wealth effects’ on aggregate consumption. The method exploits the well-documented sluggishness of consumption growth (often interpreted as ‘habits’ in the asset pricing literature) to distinguish between short-run and long-run wealth effects. In U.S. data, we estimate that the immediate (next-quarter) marginal propensity to consume from a $1 change in housing wealth is about 2 cents, with a final long-run effect around 9 cents. Consistent with several recent studies, we find a housing wealth effect that is substantially larger than the stock wealth effect. We believe that our approach is preferable to the currently popular cointegrationbased estimation methods, because neither theory nor evidence justifies faith in the existence of a stable cointegrating vector. JEL Classification: E21, E32, C22
T3  - CFS working paper series - 2006, 35 
KW  - Housing Wealth
KW  - Wealth Effect
KW  - Consumption Dynamics
KW  - Asset Price Bubbles
KW  - USA
KW  - Verbrauch
KW  - Unbewegliche Sache
Y1  - 2006
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/1616
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30-38092
IS  - November 12, 2006
ER  -