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Consumption, personal income, financial wealth, housing wealth, and long-term interest rates: a panel cointegration approach for 50 US states

  • Dimitra Kontana and Stilianos Fountas EMAIL logo


This study investigates the long-run and short-run relationship between consumption, income, financial and housing wealth, and a long-term interest rate for the 50 US states. Using an updated set of quarterly data from 1975 to 2018, we perform panel cointegration analysis allowing for cross-sectional dependence. We obtain the following results. First, there is strong evidence for cointegration among consumption and its determinants. Second, estimates of the housing wealth and financial wealth elasticity of consumption range from 0.072 to 0.115 and 0.044 to 0.080, respectively. Finally, Granger causality tests show that there is a bidirectional short-term causality between per capita consumption, income, and financial wealth in the short run and between all the variables in the long run.

JEL codes: E21; E44; R31

Corresponding author: Stilianos Fountas, Department of Economics, University of Macedonia, Thessaloniki, Greece, E-mail:


We are grateful to an anonymous referee for helpful comments and suggestions. The usual disclaimer applies.

  1. Author contribution: All the authors have accepted responsibility for the entire content of this submitted manuscript and approved submission.

  2. Research funding: None declared.

  3. Conflict of interest statement: The authors declare no conflicts of interest regarding this article.


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Supplementary Material

The online version of this article offers supplementary material (

Received: 2020-05-16
Revised: 2021-05-08
Accepted: 2021-05-18
Published Online: 2021-06-09

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