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 regressions relating consumption to income and wealth measures, ﬁnding a statistically signiﬁcant and rather large eﬀect of housing wealth upon household consumption.
Case, Karl E.; Quigley, John M.; and Shiller, Robert J., "Comparing Wealth Effects: The Stock Market Versus the Housing Market" (2001). Cowles Foundation Discussion Papers. 1597.