engleski

The Effect of Housing and Stock Market Wealth on Consumption in Emerging and Developed Countries

This study examines the long-run and the 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 estimator of dynamic heterogeneous panel data on the sample of 30 developed and emerging economies. The sample countries are segmented into three separate panels: developed bank-based panel, developed market-based panel, and emerging bank-based panel. Empirical estimates support the existence of the long-run and the short-run stock market wealth effect in both groups of the developed countries, with this effect being particularly strong in the developed market-based countries. Moderate long- run housing wealth effect is confirmed only for the developed bank-based countries, while 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.

private consumption ; wealth ; panel cointegration ; emerging economies

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