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Licensed Unlicensed Requires Authentication Published by De Gruyter May 10, 2005

Comparing Wealth Effects: The Stock Market versus the Housing Market

  • Karl E. Case , John M. Quigley and Robert J. Shiller
From the journal Topics in Macroeconomics


We examine the link between increases in housing wealth, financial wealth, and consumer spending. We rely upon a panel of 14 countries observed annually for various periods during the past 25 years and a panel of U.S. states observed quarterly during the 1980s and 1990s. We impute the aggregate value of owner-occupied housing, the value of financial assets, and measures of aggregate consumption for each of the geographic units over time. We estimate regression models in levels, first differences and in error-correction form, relating consumption to income and wealth measures. We find a statistically significant and rather large effect of housing wealth upon household consumption.

Published Online: 2005-05-10

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