The influence of housing price developments on household consumption: Empirical analysis for the Czech Republic

Arbeitspapier

This paper studies how the change of wealth of households represented by housing prices and stock market prices influences households' consumption. We provide empirical analysis based on the Czech aggregate data from 1998-2009. We analyse the effect of change in households' wealth on the consumption of both durable and non-durable goods employing the VAR and VEC models on quarterly data. The robustness of results is verified by Dynamic OLS and Fully Modified OLS framework. We find a positive effect of both housing wealth and stock market wealth on both types of consumption. In case of non-durable goods consumption, we estimate the cointegrating vector and conclude that the elasticity of non-durable goods consumption with respect to housing wealth is over three times greater than with respect to stock market wealth.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IES Working Paper ; No. 22/2012

Classification and Topics

• Classification: Wirtschaft ; Single Equation Models; Single Variables: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes ; Prices, Business Fluctuations, and Cycles: Other ; Asset Pricing; Trading Volume; Bond Interest Rates
• Subject: households ; housing prices ; consumption ; housing wealth ; stock market wealth ; VAR model ; VECM

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dvořáková, Sylvie ; Seidler, Jakub
• Event: Veröffentlichung
• (who): Charles University in Prague, Institute of Economic Studies (IES)
• (where): Prague
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/83450
• Last update: 10.03.2025, 11:44 AM CET