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BOK Working Paper No.2020-27, Consumption Dynamics and a Home Purchase

Economic Research Institute (82-2-759-5431) 2020.12.08 2114

Title : Consumption Dynamics and a Home Purchase

Author : Dongjae Jung(BOK) 

<Abstract>

This paper investigates the effects of a home purchase, which is one type of durable expenditure, on changes in non-durable consumption at the household level. The results suggest that there is a break on the consumption path at the time of a home purchase; non-durable consumption in the after-period of a home purchase is 5.2% higher than the before-period. The results propose an extra path that connects the two cycles of housing markets and consumption by suggesting that home purchases trigger not only additional home-related durable spendings, but also release delayed consumption.

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