Financial and housing wealth effects on private consumption: the case of Greece

Authors

  • Ersi Athanassiou
  • Ekaterini Tsouma

Keywords:

Wealth effects, private consumption, cointegration, Greece, E21, C22

Abstract

This paper investigates the effects of household wealth on consumptionexpenditurein Greece. Recognising the distinct and leading role of housing in the wealthportfolios of Greek households, we disentangle financial wealth effects fromhousingwealth effects, to assess the impact of these two wealth components separately.This type of analysis is being conducted for the first time for the case of Greece,and employs quarterly data for the time period 2000-2015, including a novelseries on housing wealth constructed for the purpose of the paper. The resultsof the analysis point to the existence of a statistically significant cointegratingrelationship between consumption and wealth, with positive financial and housingwealth effects in the long run. In the short run, both wealth components appear toplay a role in determining consumption, with the effects of housing wealth beingmore pronounced.

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