The effect of housing and stock market wealth on consumption in emerging and developed countries |
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| Institution: | 1. Zagreb School of Economics and Management, Jordanovac 110, 10000 Zagreb, Croatia;2. University of Zagreb, Faculty of Economics and Business, Trg J. F. Kennedya 6, 10000 Zagreb, Croatia;3. Institute of Economics Zagreb, Trg J. F. Kennedya 7, 10000 Zagreb, Croatia;1. Faculty of Economics at University of Split, Cvite Fiskovi?a 5, 21000 Split, Croatia;2. Institute for Tourism, Vrhovec 5, 10000 Zagreb, Croatia;1. The London School of Economics and Political Science, LSEE Research on South Eastern Europe, European Institute, Cowdray House, COW 2.01, Houghton Street, London WC2A 2AE, UK;2. The Institute of Economics, Zagreb, Trg J. F. Kennedyja 7, 10000 Zagreb, Croatia;1. Croatian Geological Survey, Milana Sachsa 2, 10 000 Zagreb, Croatia;2. Institute for Tourism, Vrhovec 5, 10 000 Zagreb, Croatia;1. North Carolina State University, United States;2. Ekonomski Institut Zagreb, Croatia |
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| Abstract: | This study examines the long- and short-run relationship between private consumption, housing wealth, stock market wealth and income. In order to asses this relationship empirically, we use pooled mean group estimators of dynamic heterogeneous panel data on a sample of 30 developed and emerging economies. The sample countries are segmented into three separate panels: a developed bank-based panel, a developed market-based panel, and an emerging bank-based panel. Empirical estimates support the existence of long- and short-run stock market wealth effects in both groups of developed countries, with the effect being particularly strong in the developed market-based countries. A moderate long-run housing wealth effect is confirmed only for the developed bank-based countries, while a very strong short-run housing wealth effect is present in the developed market-based countries. As far as the emerging countries are concerned, the evidence is somewhat inconclusive, but it does seem to suggest that both wealth effects are effective in the long run, with housing wealth being more dominant. |
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| Keywords: | Private consumption Wealth Panel cointegration Emerging economies C33 D12 E21 E44 |
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