A Dynamic Panel Data Based Research on Housing and Stock Market Wealth Effect

This paper quantifies the different impact of housing and stock prices fluctuation on consumption based on 30 provinces' panel data from 1999 to 2012 in China. Unlike previous studies, the analysis finds that the long-run impact of an increase in housing price is weakly positive, while that of an increase in stock price is surprisingly negative. If housing prices rise by 1% then the consumption spending will grow by 0.002377%. However, stock prices rising by 1% will make consumption spending falling by 0.011283%. These finding simply it is important to improve stock markets while keep housing price stable for China to expand its domestic demand.