Housing Wealth Effects in Japan: Evidence Based on Household Micro Data

Abstract

Using micro data covering almost 500,000 Japanese households over the period 1983−2012, this paper examines to what extent household consumption responds to changes in housing wealth. Instead of employing self-reported or regionally averaged values of housing wealth, we directly estimate the housing wealth of individual households by matching several official statistics, providing an ideal setting to identify housing wealth effects on consumption. Employing cross-section and pseudo-panel based regressions, we find that the marginal propensity to consume (MPC) out of housing wealth is approximately 0.0008−0.0013 for nondurable consumption and 0.0059−0.0082 for total consumption. We further find that the consumption response of older households is larger than that of younger households, which is consistent with the pure wealth effects hypothesis.基盤研究(S) = Grants-in-Aid for Scientific Research (S