How Consumer Confidence Affects the Impact of Housing and Stock Market Wealth on Consumption? Evidence from Asian Countries

Heru Santoso, Takeshi Inoue


This study explores the effect of consumer confidence in the impact of housing market and stock market wealth on private consumption for a panel of 10 Asian countries. This study using quarterly data from the 1 st quarter of 2010 to the 4th quarter of 2017 and applies panel Fully Modified Ordinary Least Square (FMOLS) method to assess the long-term relationship between variables. The result shows that the inclusion of consumer confidence changes the previous impact of housing market wealth and stock market wealth on consumption. Particularly, the interaction between consumer confidence and housing market wealth has a positive and significant impact on consumption, which is different from the previous insignificant impact of housing market wealth on consumption. On the other hand, the interaction between consumer confidence and stock market wealth has a negative significant impact on consumption, which is different from the previous positive significant impact of stock market wealth on consumption. In addition, the supplementary findings of this study show (1) countries with higher financial sector development have stronger housing market and stock market wealth effect than countries with lower financial sector development and (2) countries with higher income level have stronger housing market and stock market wealth effect than countries with lower income level.


consumer confidence; consumption; housing market wealth; stock market wealth; panel FMOLS

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