, income, and wealth. We then contrast RI with habit formation and show that the two models make very different general …

housing net worth on household expenditures during the Great Recession. Their widely-cited estimates are based on proprietary … specification on our data, we obtain values for the elasticity of expenditures to the housing net worth shock that are virtually … conclusions about the separate roles of house prices and initial housing exposure/leverage for the drop in expenditures. Moreover …

measure the effect of changes in the housing share of net worth on total household expenditures during the Great Recession …-accessible proxy for expenditures in non-durable goods. We re-affirm their findings in our data, and refine their analysis in several … consumption versus nominal expenditures; and (iii) we infer the implied elasticity of total non-durable expenditures in goods and …

consumption expenditures. As a result, tests of standard theories of consumption (such as the Permanent Income Hypothesis, or PIH … goods and services to measures of real income and wealth, where the latter are deflated by a price index for total … consumption expenditures. We demonstrate that this procedure is only valid under the assumption that real consumption of …