|Department of Economics|
The Impact of Housing Wealth on Consumption in Turkey: A Panel Data Analysis for 2004-2013 Period
(Supervisor:Nesrin Sungur Çakmak)
ABSTRACTThe contemporary literature that investigates the positive relation between housing wealth change and consumption change focuses on three main explanations. The first is that increasing housing wealth stimulates consumption through the wealth effect. The second explanation is that by the collateral effect that is a housing wealth rise encourages a comparable rise in the consumption level of households. The third is common factor approaches, which claim that both housing wealth and consumption are influenced by common factors.
We analyzed the wealth effect and common factor approaches to understand the relationship between housing wealth and consumption. The trajectory of the relationship between housing wealth and consumption from 2004 to 2013 was analyzed by using Household Budgetary Survey (HBS) micro data published by TURKSTAT. Our results indicate that wealth effect is not the only driver of the relationship between consumption change and housing wealth change in Turkey for this period. Additionally, we obtained different results for different household sub-groups and with different age boundaries. A household’s characteristics and properties are crucial in analyzing and understanding the wealth effect’s results. The estimation results for common factor approaches indicate that consumer credit and total domestic credits are statistically significant in explaining the link between housing wealth and consumption level of households.