Comparing Wealth Effects: The Stock Market Versus the Housing Market

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

Wealth Effects Revisited 1975-2012

We re-examine the links between changes in housing wealth, financial wealth, and consumer spending. We extend a panel of U.S. states observed quarterly during the seventeen-year period, 1982 through 1999, to the thirty-seven year period, 1975 through 2012Q2. Using techniques reported previously, 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 regression models in levels, first differences and in error-correction form, relating per capita consumption to per capita income and wealth. We find a statistically significant and rather large effect of housing wealth upon household consumption. This effect is consistently larger than the effect of stock market wealth upon consumption. In our earlier version of this paper we found that households increase their spending when house prices rise, but we found no significant decrease in consumption when house prices fall. The results presented here with the extended data now show that declines in house prices stimulate large and significant decreases in household spending. The elasticities implied by this work are large. An increase in real housing wealth comparable to the rise between 2001 and 2005 would, over the four years, push up household spending by a total of about 4.3%. A decrease in real housing wealth comparable to the crash which took place between 2005 and 2009 would lead to a drop of about 3.5%

From Network Interface to Multithreaded Web Applications: A Case Study in Modular Program Verification

Many verifications of realistic software systems are monolithic, in the sense that they define single global invariants over complete system state. More modular proof techniques promise to support reuse of component proofs and even reduce the effort required to verify one concrete system, just as modularity simplifies standard software development. This paper reports on one case study applying modular proof techniques in the Coq proof assistant. To our knowledge, it is the first modular verification certifying a system that combines infrastructure with an application of interest to end users. We assume a nonblocking API for managing TCP networking streams, and on top of that we work our way up to certifying multithreaded, database-backed Web applications. Key verified components include a cooperative threading library and an implementation of a domain-specific language for XML processing. We have deployed our case-study system on mobile robots, where it interfaces with off-the-shelf components for sensing, actuation, and control.National Science Foundation (U.S.) (Grant CCF-1253229)United States. Defense Advanced Research Projects Agency (Agreement FA8750-12-2-0293

From Network Interface to Multithreaded Web Applications: A Case Study in Modular Program Verification

Many verifications of realistic software systems are monolithic, in the sense that they define single global invariants over complete system state. More modular proof techniques promise to support reuse of component proofs and even reduce the effort required to verify one concrete system, just as modularity simplifies standard software development. This paper reports on one case study applying modular proof techniques in the Coq proof assistant. To our knowledge, it is the first modular verification certifying a system that combines infrastructure with an application of interest to end users. We assume a nonblocking API for managing TCP networking streams, and on top of that we work our way up to certifying multithreaded, database-backed Web applications. Key verified components include a cooperative threading library and an implementation of a domain-specific language for XML processing. We have deployed our case-study system on mobile robots, where it interfaces with off-the-shelf components for sensing, actuation, and control.National Science Foundation (U.S.) (NSF grant CCF-1253229)United States. Defense Advanced Research Projects Agency (DARPA, agreement number FA8750-12-2-0293

Wealth Effects Revisited 1978-2009

We re-examine the link between changes in housing wealth, financial wealth, and consumer spending. We extend a panel of U.S. states observed quarterly during the seventeen-year period, 1982 through 1999, to the thirty-one year period, 1978 through 2009. Using techniques reported previously, 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 regression models in levels, first differences and in error-correction form, relating per capita consumption to per capita income and wealth. We find a statistically significant and rather large effect of housing wealth upon household consumption. This effect is consistently larger than the effect of stock market wealth upon consumption. This reinforces the conclusions reported in our previous analysis. In contrast to our previous analysis, however, we do find – based on data which include the recent volatility in asset markets – that the effects of declines in housing wealth in reducing consumption are at least as large as the effects of increases in housing wealth in increasing the course of household consumption.