Housing Wealth and Consumption Expenditure

  title={Housing Wealth and Consumption Expenditure},
  author={Christopher D. Carroll},
This memo considers the effect of housing wealth fluctuations on consumption expenditures. While empirical evidence from macroeconomic, regional, and microeconomic data varies, on balance most of the evidence seems consistent with a medium-run (after 3 years or so) housing wealth MPC in the neighborhood of 5-10 cents. The paper presents its own methodology for estimating the housing MPC, and concludes that the immediate (next-quarter) MPC from a change in housing wealth is around 1.5 cents… CONTINUE READING

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