Series: Working Papers. 9411.
Author: Olympia Bover and Ángel Estrada.
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Abstract
In this paper we specify and estimate Euler equations for durable expenditure with house purchase effects which are interpreted as capturing the influence of housing decisions on the intertemporal allocation of durable expenditure. We use household panel data obtained from the Spanish Family Expenditure Survey (1985.I to 1991.IV). Our results indicate that there is a significant effect of purchase of the main residence on durable expenditure, the former being associated with around a tenfold increase in durable expenditure. This result leads us to believe that this is a relevant part of the explanation of the consumption increase in the 80's in Spain, given the increased demand for owner-occupied housing at the time.