Analysis Of Wealth Effect Of Resident Financial Assets And Real Estate

Western scholars proposed as early as in the20th century, the initial concept of the wealth effect. The wealth effect is:if other conditions are the same, currency balance changes will cause changes in total consumption expenditure. The wealth effect of the assets can be divided into the wealth effect of the financial assets and the wealth effect of non-financial assets. In the pre-study of the wealth effect, scholars have focused on the financial assets, especially the wealth effect of the price of securities. By the late1990s, global stock markets have fallen sharply, have had a tremendous impact on the global economy, but the consumer spending of residents is not reduced. To this end, the theoretical circles starting to focus on the wealth effect of the real estate market, the more common view is used to explain this phenomenon "the negative impact of the stock market decline in the demand to some extent, the wealth effect of the real estate market offset". The low interest rates in recent years, gave birth to the real estate market bubble, consumer and economic growth linkage reaction theorists pay more attention to the study of the wealth effect of the real estate market.Based on existing wealth effect theory and literature, the paper first comprehensive review of the theoretical and empirical residents asset wealth effect, combined with our unique background.Then we combed the residents asset play wealth effect mechanism, to summarize the residents financial assets and real estate wealth effect characteristics. Second, co-integration test, test assets and there is a relationship between the consumer and further confirmed that there is a relationship between the residents of all financial assets, real estate and consumer spending. Then Granger causality method determines the order of the causal link between any two. Again, this paper corrected error model analysis of short-term and long-term relationships. Empirical results from residents’ assets in the short term, the wealth effect is not significant, but the long-term point of view the effect on consumption of residential real estate is stronger than the impact of the financial assets of consumption, the wealth effect of the former0.86, the wealth effect of the latter is0.75. Then use vector auto regression model to study the impact of the short-term to long-term stability. Impulse analysis also confirmed that the residents financial assets and real estate wealth effect, and the interpretation of the ratchet effect of consumer spending habits, and two types of assets between the crowding-out effect. Finally, we conclude the paper, and make policy recommendations.