Abstract
Using Korean household panel data, this paper investigates the impact of house price changes on household consumption, focusing on asymmetric responses across homeownership status and the direction of house price fluctuations. I find that rising house prices have little influence on household consumption, whereas a decrease in house prices brings about a substantial impact. Falling house prices reduce homeowners’ consumption and raise renters’ consumption, implying that the opposing pressures on two household groups could substantially offset each other. The responses are found to be asymmetric across several aspects of household heterogeneities. Owners of multiple houses or relatively larger residences and older owners show greater responses. In response to rising house prices, homeowners with loan-to-value ratios at the standard cutoff level for a home equity line of credit substantially increase their consumption. Several pieces of evidence support the operation of the wealth effect and collateral effect channels.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
