Tuesday, July 2, 2013
Rising house prices don’t tend to fuel greater consumption by households
Do house prices influence consumption patterns? The economic crisis has led to a slump in both the price of houses and in consumption, meaning that any link between the two is of great interest to policy-makers who wish to kick-start consumption in order to reinvigorate growth in Western economies. New research from Martin Browning, Mette GÃ¸rtz and Soren Leth-Peterson attempts to find the links between consumption and house prices. However, they find that any increase in house prices has no effect on consumption by the old and only a very small effect on consumption for the young.