The Connection between House Prices and Consumption

August 23, 2016

Many believe there’s a connection between changes in house prices and changes in consumption. But why would changes in house prices affect the purchases households make, since they don’t necessarily result in a tangible increase in spendable assets?

David Berger, an assistant economics professor at Northwestern University, discussed this connection in his paper “House Prices and Consumer Spending,” presented at the St. Louis Advances in Research (STLAR) Conference on April 7-8. In the video above, he discussed his work in an interview with St. Louis Fed Vice President and Economist David Andolfatto.

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