Consumption and housing wealth breakdown of the effect of a rise in interest rates
Source: Applied Economics, Volume 44, Number 16, 1 June 2012 , pp. 2091-2110(20)
Abstract:In this article the effect on consumption of a fall in housing wealth and housing prices, resulting from an increase in interest rates is estimated. With the help of a dynamic multiequation, macroeconomic model, the consumer response function is broken down into two parts: a direct response related to a rise in the cost of credit and another indirect one related to the deterioration of the property market. Estimation of the theoretical model is done by means of a Vectorial Error-Correction (VEC) model.
Document Type: Research article
Publication date: 2012-06-01