Is there a housing wealth effect in European countries?

In this study, a housing wealth effect on personal consumption is assumed and tested on 16 selected European countries using an estimator developed for dynamic heterogeneous panel data analysis. Empirical estimates have shown that there is a long-run and a short-run housing wealth effect in analysed countries. The elasticity of real private consumption to changes in real disposable income has shown to be positive and statistically significant as well as the elasticity of consumption to changes in real housing wealth. Therefore, the research hypothesis of this paper of a statistically significant and positive long-term relationship between housing wealth and private consumption in the analysed countries was confirmed.