Abstract
This note reviews recent Institute work on the factors that might affect the future evolution of consumption. Drawing on Barrell and Davis (2007), it discusses the evidence for the effects of housing wealth on consumption, and shows that there has been strong and well supported evidence for a link for some time. This evidence suggests that a fall in house prices will cause consumption growth to slow. The discussion also covers evidence from Barrell, Davis and Pomerantz (2006) on the effects of financial crises on consumption behaviour. They suggest that there are large and significant negative effects on consumption during banking crises that are over and above the effects on consumption of the crisis-induced changes in income and wealth. Much of this work is embedded in our structural model, NiGEM, and it is possible to estimate the effects of house price declines and financial crises on consumption and income using the model. The note also gives a set of ready reckoners for the impacts of house price declines on output and of a given associated fall in the level of housing wealth on the level of consumption.
Publisher
Cambridge University Press (CUP)
Subject
General Economics, Econometrics and Finance
Reference7 articles.
1. Banking Crises and Economic Growth
2. Benito, A. , Thompson, J. , Waldron, M. and Wood, R. (2006), ‘House prices and consumer spending’, Bank of England Quarterly Bulletin, Summer, pp. 142–54.
3. Costs of financial instability, household-sector balance sheets and consumption
Cited by
2 articles.
订阅此论文施引文献
订阅此论文施引文献，注册后可以免费订阅5篇论文的施引文献，订阅后可以查看论文全部施引文献
1. Do social networks promote homeownership?;International Review of Economics;2019-11-27
2. Prospects for the UK Economy;National Institute Economic Review;2008-10