Wealth portfolio of Hungarian households Urban legends and facts

Transcription

1 MNB Occasional Papes GÁBOR VADAS Wealh poolio o Hunaian households Uban leends and acs

2

3 Wealh poolio o Hunaian households Uban leends and acs Novembe 7

4 The views expessed hee ae hose o he auhos and do no necessaily elec he oicial view o he cenal bank o Hunay (Maya Nemzei Bank. Occasional Papes 68. Wealh poolio o Hunaian households Uban leends and acs (A maya házaások vayona leendák és ények Wien by: Gábo Vadas*, ** Budapes, Novembe 7 Published by he Maya Nemzei Bank Publishe in chae: Judi Ilódi-Csaó Szabadsá é 8 9., H 85 Budapes ISSN (on-line * Gábo Vadas, Economics Depamen, Maya Nemzei Bank (he cenal bank o Hunay and Depamen o Economics, Cenal Euopean Univesiy. vadas@mnb.hu ** I am indebed o Pée Benúcz, Ánes Csemely, Áon Hováh, Geely Kiss, Mihály A. Kovács and Banabás Viá o hei valuable commens. All emainin eos ae mine.

5 Conens Absac 5. Inoducion 6. Households wealh and sucual beaks 7.. Sylized acs 7.. Deecion o sucual chanes. Inenaional compaison and seady sae wealh aios 4 4. A simple model o housin make 7 5. Theoeical descipion o wealh developmen 8 6. Summay Reeences A. Appendix 4 A.. Esimaion o households wealh 4 A.. Connecion beween income owh and equilibium wealh aios 6 A.. Esimaion o model paamees 8 MNB OCCASIONAL PAPERS 68. 7

6

7 Absac As siniican pa o naional wealh, households wealh is he cenal issue in boh policy debae and academic lieaue. Neveheless, in Hunay lile eo has been made so a o conduc hoouh evaluaion o households wealh o he las decade. Unde he auspices o he plual o anecdoe is no evidence axiom, his sudy povides a omal evaluaion o Hunaian wealh and connecs he developmen o wealh elemens o economic evens. Doin so, as a by-poduc, we also display he esimaed wealh levels o households. Based on inenaional compaison and economeic echniques, i is conimed ha he ecen inancial wealh level o Hunaian households is sill elaively low, meanwhile he cuen housin wealh is no evidenly below he equilibium level. These esuls povide an explanaion why ovenmenal housin subsidy scheme has is majo eec on house pices ahe han housin sock. Besides, he soain house pices, via housin loans, vanished inancial savins. The savin disase, i.e. small o in some peiods even neaive savin aes, expeienced in ealy s, o a ceain exen, is he ohe side o he savin miacle o ealy and mid 9 s when households eaaned hei wealh poolio om eal asses o inancial asses implyin deceasin house pices and hih savin ae. JEL: E, E, E, H. Keywods: household wealh, housin subsidy scheme, house pice. Összeolaló A házaások vayonával kapcsolaos események onos iyelme kapnak az elemzõk, a dönéshozók és emészeesen a házaások éleében. E kiemel szeep ellenée az elmúl íz évben nem készül sziszemaikus áekinés a maya házaások vayonelemeiõl. A anulmány ez a hiányossáo iyekszik bepóolni. Váosi leendák és anekdoikus evidenciák helye a anulmány omális becslésekkel és módszeekkel elemzi a házaások vayonában a 9-es évek közepéõl napjainki lezajlo válozásoka, illeve köi össze ezeke azdasái eseményekkel. Mindemelle a lakossá eljes vayonának mehaáozásához becslés adunk a lakásáakól, lakásvayon szinjéõl és a aós oyaszási cikkek állományáól is. Nemzeközi összehasonlíás és omális eszek szein a maya házaások pénzüyi vayona meleheõsen alacsony, mí inalanvayonuk kiemelkedõen maas. Ez a meállapíás mayaázao ad aa, hoy a kományzai lakásámoaási endszenek mié vol sokkal eõeljesebben haása vol a lakásáaka, min a lakásállománya. Ebbõl kövekezõen pedi a -es évek elején apaszal endkívül alacsony lakossái meakaíás, a meakaíási kaaszóa észben a 9-es évek elején apaszal meakaíási csoda másik oldala, azaz a vayonelemek közöi isméel áendezõdés eedménye. MNB OCCASIONAL PAPERS

8 . Inoducion Ciaion o households wealh is a ecuin subjec in seveal aeas o ou lives. Poliicians, policy makes, analyss and, o couse, households hemselves ae concened abou hei wealh posiions. While poliicians woy abou hei elecos sandad o livin, analyss keen on undesandin and pedicin how ceain shocks aec he households wealh and hence hei behavio. Founded on a common conjecue, namely he households wealh is a subsanial pa o a naion s wealh, he eae inees is compehensible. Theoeically oiened eseach and models ae also ond o employin housin o duable consumpion sock in uiliy uncion. Aoki e al. (4 povide a micoeconomic oundaion o how housin wealh aec consumpion expendiue via isk pemium o households loan. Anohe ineesin examinaion o households wealh is he pape o Buce e al. (4 in which hey invesiae he elaion beween economic and subjecive well-bein. Accodin o hei esuls, consumpion, income and wealh all oehe ale he saisacion level o households. This esul aionalizes he appeaance o housin and inancial wealh in uiliy uncion, o insance money-in-he-uiliy appoach in he lieaue o moneay heoy. Bein he oundaion o heoeical woks and pacical analysis, households wealh daa and elaed sylized acs ae essenial. Cadoso and da Cunha (5 conduc a deailed eseach abou he wealh poolio o Pouuese households. Simila execise can be ound in Aon and Muellbaue (6a o Souh Aica, Niemeläinen e al. (6 o Finland o O. Bee e al. (6 o Noway. Conay o his disinuished aenion, lile eo has been made o conduc hoouh evaluaion o Hunaian households wealh and is sucue o he las decade. Zsoldos (997 povided a sysemaic examinaion o he peiod 98 o 996 bu since hen no sudy deal wih he enie wealh posiion. Owin o he lack o sudies in Hunay, seveal leends and conjecues have been saed abou he sevee decline in inancial savins ae, he housin wealh level, he eec o housin subsidy scheme and EU accession on house pice level. Unde he auspices o he plual o anecdoe is no evidence axiom, he aim o his sudy is o assess he developmen o wealh elemens and connec hem o economic evens. In ode o aain his oal, his pape also pesens he wealh levels as he by-poduc o ou analysis. Due o he ac ha housin wealh is expeced o be he laes pa o households wealh, we pay special aenion o housin subsidy scheme iniiaed by Hunaian ovenmen. The es o he sudy is oanized as ollows. Secion II collecs sylized acs and evaluaes he sucual chanes wih he aid o omal economeic ess. In ode o assess he cuen wealh level o households, subsequen secion compaes seveal counies wealh level and esimaes he expeced seady sae wealh levels. Usin a small heoeical model inoduced in Secion IV, succeedin pa simulaes his model and connecs he impulse esponses o he acs and economic evens. Finally, Secion V concludes. Appendix displays he esimaion deails o housin wealh and he sock o consume duables, povides omal poo o how income owh aecs seady sae wealh aios and inally displays he esimaion o model paamees. 6 MNB OCCASIONAL PAPERS 68. 7

9 . Households wealh and sucual beaks Hunaian households have been aeced by seveal evens and shocks o he las en yeas. One o hem was he inceasin disposable income. By he end o 99s, households became less cedi consain hence moe and moe amilies wee able and willin o ake ou consume cedis and epay he monhly insallmens. Paallel wih inceasin disposable income, he lae 99s compised ohe wo subsanial eecs: he Russian inancial cisis and he beinnin o inensive ovenmen housin subsidy. The lae one has undeone seveal chanes since is launch. Due o he pemanen adjusmen o ovenmenal suppo sysem i is no easible o lis all he modiicaion, hence, we ouline only he majo chanes. Beween 995 and 999 households wee eliible o apply o social subsidy in which he suppo o new house consucions depended on he numbe o childen and, on he ohe hand, inees-subsidy up o.8 million Hunaian Foin (heeae HUF loan value in he case o new house consucion and.6 million HUF in ohe cases. In Januay 999, he ceilin o loan value inceased om.6 million o. million HUF. In Febuay, subsidy scheme was exended o econsucion and second-hand housin make. Loan-ceilin inceased o million HUF. In he same yea ovenmen inoduced an addiional inees subsidy up o million HUF in Auus. The maximum duaion o subvenion was yeas. In, he so-called hal social subsidy was esablished, which was he hal o he inancial suppo o he nomal social subsidy. In Mach, ovenmen inceased he maximum duaion o subvenion o yeas. By, due o he enomous aise in new housin loan, i became eviden he subsidy scheme was no susainable. In 4, ihenin measues pimaily aemped o cu he bude expendiues on inees ae subsidies on new housin loans. Given he lowe subsidies o he new loans, banks poi mains declined, paallel wih he siniican incease in he inees buden o households. Fuhemoe, he chanes o he subsidy scheme ave ise o wo new eaues: moae aes became paly linked o make aes, and he dieence beween subsidies o new and exisin housin widened om o aound 4 pecenae poins. The loan-ceilin has been educed o 5 million HUF in he case o new consucion and 5 million HUF in he case o second-hand housin make. The laes majo evision o housin subsidy scheme ook place in Febuay 5. On one hand, he eliibiliy has been limied o youn maied couples and sinle-paen amilies. On he ohe hand, he loan-ceilins have been uhe dieeniaed. I is 5 million i he popey is siuaed in Budapes o ohe capial o counies and million in he case o any ohe locaion. Meanwhile he loan-ceilin in second-hand housin make became million i he popey is siuaed in Budapes o ohe capial o counies and 8 million in he case o any ohe locaion. Alon wih ihenin housin subsidy scheme, anohe eec also made condiions moe unavoable. In he ealy s, he yield cuve showed a seep neaive slope, elecin invesos conidence in he poiabiliy o he conveence play saey in he Hunaian ovenmen bond make. Howeve as concens abou he exenal and inenal disequilibium o he Hunaian economy inceased in, he lon semen o he yield cuve saed o incease siniicanly, puin an end o he yield conveence ha chaaceized lon yields in he pevious yeas... STYLIZED FACTS The mos noiceable phenomenon in connecion wih inancial wealh posiion is ha he aio o ne inancial wealh o income is pacically consan since (see he uppe-le panel o Fiue. As o he inancial asses, in he beinnin o eime chane, i. e. 99, he ypical deposi ype was he ja in he cupboad and appoximaely 4 pecen o ne inancial wealh was held in cash. By he beinnin o his aio dopped unde pecen. Due o he ea o hypeinlaion in mid 9 s he FX denominaed deposi became a avoie savin om, which, ae he consolidaion o inlaion expecaions, adually deceased o 5 pecenaes. By he mid 9 s Hunaian households bean o employ moe sophisicaed savins The social subsidy is based on he numbe o childen, namely, households eniled o.,. and. million HUF pe one, wo and hee childen especively. Any addiional child inceased he inancial suppo by. million HUF. MNB OCCASIONAL PAPERS

10 MAGYAR NEMZETI BANK oms, such as socks and muual unds. As o he quoed socks, households abandoned sock exchane because o allin sock pices ieed by Russian inancial cisis. Even ae subsanial soain o sock make pices in he las ew yeas Hunaian households diseaded quoed shaes as a savins vaian (see he uppe-ih panel o Fiue. Even houh he inancial asse/income aio coninues o incease alon he same end, i has been ose by he households liabiliies ha expanded a hihe pace. In he is phase, aound 998, he inceasin income eased he liquidiy consain and made he HUF-denominaed consumpion loan available. This was ollowed by oein exchane (heeae FX denominaed consumpion loan since (see he lowe-le panel o Fiue. A he same ime ovenmenal housin subsidy scheme bean o simulae he HUF-denominaed housin loan. The ihenin o housin subvenion shied he housin loan oiinaion o oein exchane-denominaed moae (see he lowe-ih panel o Fiue. Cha Financial wealh and is elemens Pe cen 6 Pe cen HFW/PDI HFW_ASSET/PDI HHW_LIABS/PDI Quoed socks/hfw Muual und/hfw Pe cen 8 Pe cen Consumpion Ioan (HUF/HFW Consumpion Ioan (FX/HFW Housin Ioan (HUF/HFW Housin Ioan (FX/HFW Whee HFW and PDI denoe he households inancial wealh and annual pesonal disposable income in cuen pice. HUF and FX indicae he HUF and oein exchane-denominaion. 8 MNB OCCASIONAL PAPERS 68. 7

11 HOUSEHOLDS WEALTH AND STRUCTURAL BREAKS No supisinly, ou esimaed housin wealh is siniicanly hihe han inancial wealh. To be pecise, households housin wealh is moe han hee imes bie han hei inancial wealh. Compain ou esuls wih Zsoldos (997 esimaion o housin wealh in ealy 9 s i is appaen ha ou esimaion is consideably hihe. While Zsoldos appoximaion is 8 billion HUF a 996 pice, ou iue is nealy 8,5 billion HUF in he end o 996. This discepancy is aibued o he dieen house pice daa. While Zsoldos used he sellin pice o local ovenmen owned las, ou esimaion is based on he make pice o evey sold eal esae. Knowin ha he local ovenmen owned las wee sold o enans, he sellin pices wee se in line wih social concens, heeoe, hese pices wee much less han he acual make value. Besides he dieen daa souces, Zsoldos esimaion ends a he end o 996 and ou pice daa ae less eliable beoe 997, which endes he compaison diicul. Neveheless, he deceasin paen o eal housin wealh in ealy and mid 9 s is pesened in boh esimaions implyin same undelyin make movemens. Accodin o he uppe-le panel o Fiue hee was a consideable incease in house pices om 999 o 4, which was he peiod when soain disposable income accompanied by he mos inensive peiod o ovenmen housin subsidy Cha Housin wealh, is decomposiion and aio o annual pesonal disposable income Numbe (housand Thousand HUF 8 Billion HUF Pe cen , 4 4 4, 5, 5 4, 8 4,, 5 4, 6,, Housin sock Pice/m (le-hand scale (ih-hand scale, HHW HHW/PDI (le-hand scale (ih-hand scale 5 Numbe (housand 8 Yea on yea owh ae (pe cen New consucion Demoliion Housin sock Pice/m Noe: HHW and PDI denoe he housin wealh and pesonal disposable income in cuen pice. The values o new dwellin consucion and demoliion ae annual daa. Albei Hunaian Saisical Oice (HCSO published esimaion abou non-inancial asses o pivae secos, i is in no suiable o ou pupose. Fis, he esimaion pocedue is no documened, heeoe, i is no possible o deec he discepancies beween ohe acknowlede esimaions, such as he capial sock o Pula (, and HCSO saisics. Second, he HCSO s daa compise exemely sho ime peiod, -5, which would disable us o conduc a pope analysis. Consequenly, we apply ou own housin wealh esimaion (o esimaion deails see Secion A... MNB OCCASIONAL PAPERS

12 MAGYAR NEMZETI BANK scheme. Since housin sock can adjus sluishly, he peak in he housin wealh o income aio aound (see he uppeih panel o Fiue clealy indicaes ha he house pices ew much ase pace han income. The dominance o housin pices is noiceably deeced when we decompose he owh o housin wealh. As he lowe-ih panel o Fiue eveals ha he house pice chanes wee pimaily esponsible o housin wealh chanes unil 4. Ae his peiod, dwellin pices ae pacically consan. The inenions o housin subsidy schemes ae eneally woold: povide hihe chance o households o obain housin sevice by inceasin housin supply and/o aciliae qualiy chane. I is cucial o undesand which indicaos ae appopiae o measue he achievemen o dieen oals and do no use hem inechaneably. I he aim is o ensue bee chance o obain housin sevice hen we should examine he housin sock ha is acin he housin demand. On he conay, i we end o aciliae qualiy chane hen he elaion o new dwellin consucion and demoliion ae he appopiae iue. As o he is oal concen, based on he eyeballin o uppe-le panel o Fiue, we canno decide whehe he dynamics housin supply, i.e. housin sock, has chane siniicanly in he las en yeas. As o he qualiy chane concen, lowe-le panel o Fiue displays no chanes in he demoliion o exisin housin sock, heeoe, he hihe aciviy in dwellin consucion canno be aibued o qualiy chane. Neveheless, noe ha he hihe consucion volume does no imply siniican chane in housin sock necessaily since he numbe o new consucion is minuscule elaive o housin sock. I is also woh elaboain on he disibuions o squae mee pice and housin wealh wihin a yea. Accodin o he le panel o Fiue moe han one ouh o housin sock is in he elaively low -5 housand oins squae mee pice ane. Skewness is moe appaen when one looks a he disibuion o housin wealh (see ih panel o Fiue. Cha Hisoams o aveae house pice pe squae mee and housin wealh (5,4 Thousand 8 Thousand 5, 5,, ,5 6 6, m 5 m m m m 9 m m 54.7 m 5 m 5 m m m Pice/m (housand HUF Pice/dwellin (million HUF Anohe inomaion conen o HCSO daabase, which can eveal ineesin aspec o Hunaian housin make, is he numbe o ansacions wihin eions. In 5, hee wee 46.9 housand sales in second-hand housin make, 8 pecen o which ook place in Budapes. Compain he ansacions o he housin socks, he mos vivid housin makes wee Feje couny, Budapes and Békés couny whee.,. and.7 pecen o housin socks have been sold especively. Noad, Bosod-Abaúj-Zemplen and supisinly Pes couny (obviously excludin Budapes ae a he ohe end o he line whee nealy zeo,. and.4 pecen o housin socks have been sold especively. The lae dieence beween ansacion daa in Budapes and Pes couny implies ha he common assumpion, namely hee is a siniican low om he capial o is alomeaion, a leas in 5 4, is no suppoed by housin make ansacion daa. This phenomenon has a paicula inees in he ecen debae o inoducin housin popey ax in which a ceain dwellin-value mih emee as he limi o ax exempion (o deailed elaboaion see Kiss and Vadas, 7. 4 Neveheless he same lae discepancy emains ue in he whole sample peiod. MNB OCCASIONAL PAPERS 68. 7

13 HOUSEHOLDS WEALTH AND STRUCTURAL BREAKS Dealin wih house pices i is woh examinin anohe uban leend he EU accession o Hunay boosed/will boos Hunaian house pice, which is widespead even amon poessionals. Assumin any eec o EU accession on house pices in a small villae somewhee a away om any indusial o ouisical locaions is clealy ludicous. Theeoe, he ine vesion o he concep concens he house pices in he capial o Hunay, Budapes. Fiue 4 unambiuously conims ha EU accession in May 4 indicaed by a veical line in he iue has any eec on house pice. House pices and income ae deceases by he pace since he beinnin o in Budapes. The same paen can be obseved acoss Hunay. Cha 4 Gowh ae o house pice, income and he aio o house pice o annual income in Budapes qualey owh ae (pe cen. Pice m /income pe capia Relaive house pice/m Real income pe capia.. DETECTION OF STRUCTURAL CHANGES Pecedin pa descibed he main aibues o households wealh elemen in Hunay. In his secion, we apply moe omal appoach o ideniy he majo chanes and, wheneve i is possible, assin hem o he above-lised economic evens. Seveal ess have been poposed o es sucual beaks, o insance, Wu (4, Juhl and Xiao (5, and Wu and Zhao (6 amon ohes. Bai and Peon (996, sues a se o ess ha povides appopiae mehodoloy o examine he pesence, he numbe and he locaions o sucual beaks. In ode o obain answes o he above-descibed quesion we invoke wo ess amon he Bai-Peon ess: he double maximum es 5 and he no sucual beak vesus l beak poins es, which helps o ideniy he numbe o beaks and hei locaion. An impoan aspec o esin pocedue is o assess he possible numbe o beak poins. Geneal concen abou sucual beak es is ha he numeous beak poins may esul oo sho ime inevals. The desin o Bai-Peon es ensues ha he wo beak poins canno be oo close o each ohe by eminain he incease o he numbe o beaks. Anohe elevan noe is ha special cae should be iven when hese es saisics ae used o evaluae whehe he wealh allocaion o households is sable o no. I he shae o a wealh elemen is coninuously chanin alon a linea end hen he above-descibed ess indicae no sucual chane. To pu i dieenly, he ejecion o no sucual beaks in avo o sucual beaks is a clea indicaion o aleed wealh allocaion. Conay, he accepance o null hypohesis o no sucual beak could imply boh sable wealh shae and linealy inceasin o deceasin popoion. Consequenly, eyeballin emains a cucial pa o ou analysis. 5 Double maximum es can be applied when he main inees is he exisence o sucual beaks eadless o hei numbe and he locaions. Moe omally, double maximum mehod ess he null hypoheses o no sucual beak aains an unknown numbe o beaks. Thee exis unweihed and weihed double maximum es in which he individual F ess ae weihed o obain equal mainal p-values acoss o he numbe o beak poins. In he succeedin empiical analysis, we ae oin o use he weihed vesion o double maximum es denoed by WDmax. MNB OCCASIONAL PAPERS 68. 7

14 MAGYAR NEMZETI BANK Table Sucual beaks o wealh elemens WDmax Numbe o beaks F(l l= a Locaions o beakpoins % 5% % Income beak(s Q, 998 Q, Q, Q, 4 Q Financial wealh/income beak(s Q,997 Q, 999 Q, Q4, Q Consumpion loan (HUF beak(s Q, 995 Q, 998 Q, Q, Q Moae loan (HUF beak(s,4-5,4-5, Q, 995 Q, 997 Q, Q4, Q Housin sock no beak - House pices beak(s Q, 999 Q, Q, Q, Q4 Housin wealh beak(s Q, 999 Q, Q, Q, Q4 House pices /cuen income beak(s Q, 997 Q4, Q, Q4, 4 Q House pices /pem. income beak(s Q, 998 Q, Q, Q, Q4 Housin wealh /oal wealh beak(s Q, 997 Q4, Q, Q4, 4 Q Pemanen income is appoximaed by he consumpion expendiue. Even wihou any omal es, i is appaen ha he end o inancial wealh pe income aio boke aound. As i was oulined in he sylized acs, his phenomenon is owin o he expansion o households liabiliies. Sucual beak ess senhen his noion (see Table. The majo beaks o inancial wealh/income coespond o he exension o HUF denominaed consumpion loan, saed aound he is quae o 998, he siniican incease in HUF-denominaed moae loan saed aound and he expansion o FX-denominaed consumpion loan and housin cedi since he is quae o. The main house pice incease beween 998 and is undepinned by he esimaed locaion o sucual beaks. Besides, we ound a sucual beak aound he hid quae o, which can ee o he exension o subsidy scheme o secondhand housin make. Albei he esimaed sucual beak locaions can be saihowadly assin o he chanes in housin subsidy sysem, hey could be he eec o ohe demand shies, i.e. income and inancial make envionmen. Cha 5 Demand shies o housin demand: income and inees ae o housin loan Pe cen PHR/PDIR (m PHR/CE (m 4 4 Subsidized ae 5 Make ae 6 Noe: PHR, PDIR(m and CE(m denoe he elaive house pice pe squae mee eal monhly disposable income and eal monhly consumpion expendiue. MNB OCCASIONAL PAPERS 68. 7

15 HOUSEHOLDS WEALTH AND STRUCTURAL BREAKS I is appaen ha he inceasin income could also induce soain house pices. Howeve boh cuen and pemanen income can inluence housin demand. As o cuen income, he sylized ac secion indicaed ha he house pices mih ew ase han income. In ode o obain moe pecise esul, we examined he aio o house pices o income (see he panel o Fiue 5. Since ess essenially indicae he same beakpoins o house pices and he house pice pe income aio, we can conclude ha soain disposable income is no suicien o explain he siniican incease in house pices. As o pemanen income o income expecaion, we apply a common assumpion, namely, consumpion expendiue is se in line wih income expecaion, hence he incease in he aio o consumpion o cuen income indicaes soain income expecaion. Accodin o his assumpion, pemanen income inceased evenly om 998 o and emained aound ha level. On he one hand, house pices also inceased consideably beween 998 and implyin ha inceasin income expecaion also inluenced house pices. On he ohe hand, house pices display hihe volailiy, which is easily conneced o he elemens o subsidy scheme (see le o Fiue 5. Besides, house pices have declined since meanwhile he income expecaion emained a hih level. Applyin omal ess, we obain essenially he same beakpoins aain. Consequenly, i seem inceasin pemanen income also played pa in house pice incease, howeve he main vaiaion om 998 o and he decline since canno be explain by he pemanen income componen. Tunin o he inancial make cicumsances (see ih panel o Fiue 5, i is appaen ha he inancial make envionmen canno explain he pah o house pices. In conas o lon semen o yield cuve, he make ae o housin loan did no incease. Howeve he subsidized ae jumped in he beinnin o 4 alon wih he educion o loan-ceilin. As o housin sock, ess ae no able o deec any sucual chane 6. Given ha housin wealh is he muliplicaion o housin sock and house pices i is appaen o obseve he same sucual beaks in housin wealh as in house pices. In he ollowin pas, we pu hese indin ino inenaional pespecive and aemp o ind explanaion o hem. 6 One mih aue ha he housin sock ime seies has low vaiance, heeoe, sucual beak ess ae no able o deec he chanes. Albei his saemen has no heoeical oundaion, in ode o check he obusness o ou esuls, we simulae a ime seies wih he chaaceisics o housin sock and, in he middle o he sample new housin sas has been inceased by pecen, which is equivalen o. pecen chane in housin sock owh ae. Tess wee able o deec he pesence and locaion o beak. MNB OCCASIONAL PAPERS 68. 7

16 . Inenaional compaison and seady sae wealh aios Pevious secion evealed he wealh level o Hunaian households, howeve i is unexploed so a whehe Hunaian wealh level is hih, low o is expeced o soa o decline in he uue. Thee ae wo equen appoaches o conduc empiical evaluaion on his issue: coss-couny compaison and economeic mehods. The use o coss-couny daa eveals he elaive wealh posiion o dieen counies, which mih ideniy whehe a couny s wealh elemens ae a om he inenaional expeience. Table displays he elaed values o G7 counies and Hunay. In addiion, we also display Poual since i is eneally consideed as he mos simila couny o Hunay. 7 Table Inenaional compaison o households wealh ( as a pecenae o disposable income Ne inancial wealh Housin wealh Duable oods Toal wealh Couny Raio Couny Raio Couny Raio Couny Raio Japan 69 Ialy 477 Japan 58.7 Ialy 9 USA 94 UK 8 Ialy 4.6 Japan 744 Ialy 8 Hunay 46 UK 7.4 UK 7 UK 49 Fance 8 Canada 7. Fance 585 Fance Gemany 68 Gemany 7. USA 54 Canada 6 Poual 6 USA 6. Canada 59 Gemany 69 Canada Hunay 6 Gemany 57 Poual 55 Japan 6 Fance.7 Hunay 54 Hunay 98 USA 84. inancial wealh elemens as a pecenae o ne inancial wealh Shaes & Equiiy Muual unds Loans Moae Couny Raio Couny Raio Couny Raio Couny Raio USA 8. Ialy 7. Poual 7. Gemany 4. Fance 5.9 Gemany. Gemany 66.4 UK 4. Poual. Fance. UK 55.6 Canada. Ialy 8. USA. USA 9.9 USA 8.4 UK. Poual 9. Japan 6.4 Poual 8. Gemany. Hunay 7.6 Canada 6. Fance 4.9 Japan 9. Canada 6. Fance.7 Japan 6.8 Hunay 7. UK 5. Hunay 8. Ialy.5 Canada 6.9 Japan. Ialy 8. Hunay. Souces: Annex o OECD s Economic Oulook (Decembe 5, Cadoso and Cunha (5, Euosa, Maya Nemzei Bank, Saisic Canada and own calculaions. Fo esimaion deails see Secion A... Based on expeise judmen. Excludin muual unds. 7 As o eneal aspec, in addiion o eo- and demoaphical similaiies, Poual is he closes EU membe couny o Hunay in Human Developmen Index ankin (Poual is 8h while Hunay is 5h on he lis, o moe deails see Human Developmen Repo 6. As o speciics, he populaiy o FX denominaed loans indicaes ha Hunay will likely no ollow a modeae pah; he dynamics obseved in Hunay pobably mio he dynamics obseved in Poual, whee moae loans ose o almos 5 pe cen o GDP in he las yeas. 4 MNB OCCASIONAL PAPERS 68. 7

17 INTERNATIONAL COMPARISON AND STEADY STATE WEALTH RATIOS As o ne inancial wealh concen, Kisanova and Seon (7 showed he impoance o insiuional envionmen, o insance pension sysem, in connecion wih savin behavio. Since Hunaian insiuional envionmen is likely o be close o Geman sysem han Anlo-Saxon sysem 8 we can conclude ha he aio o inancial wealh is expeced o incease in he uue, howeve i is no likely o incease apidly and each he UK o US level. As o he elemens o inancial wealh concens, i is wohy o ouline ha he shae o muual unds, liabiliies and moae loans have inceased siniicanly since. These aios soaed o, 46 and 9 pecen especively by he end o 6, consequenly, aained a inenaionally sandad shae elaive o ne inancial wealh. Howeve since he aio o ne inancial wealh o income has no inceased, he popoions o hese wealh elemens elaive o income ae sill low. Conay o ne inancial wealh, housin wealh seems o be hih elaive o ohe counies. The level o housin wealh became moe exaodinay i we conside he aio o housin wealh o inancial wealh, which is.5 in Hunay, meanwhile he nex closes value is.6 in Ialy. Assumin ha he inancial wealh aio convees o he Geman level and housin wealh says sill, Hunaian housin pe inancial wealh aio sill emains o be he hihes. This elaive wealhiness could have a seious implicaion on how housin wealh eac o dieen shocks. The ohe and moe omal empiical appoach o examine he equilibium wealh level is he applicaion o economeic mehods. Geneally, o deec siniican deviaion om seady sae wealh aio, his appoach applies eo-coecion model (ECM beween inancial wealh and households income. The equilibium is aained when he eo coecion pa is zeo. Consequenly, his mehod seeks he wealh level ha makes he lon-un pa equal zeo a a ceain income level. 9 Neveheless, his diec mehodoloy leaves ou an impoan aco namely, he ECMs ae dynamic models, hence, exacin he lon-un pa as saic equaion ules ou addiional inomaion. I can be shown ha no only he level o income bu also is owh ae deemines he seady sae consumpion/income and wealh/income aios (o deails see Secion A.. Moe omally, he seady-sae wealh/income aio is neaive uncion o he income owh ae. In ode o be able o calculae seady sae wealh aios we apply he Quaely Pojecion Model o MNB (Benk e al, 6 paamees o consumpion uncion deined in equaion (A-. Table displays he soluion o he seady sae wealh ae based on equaion (A-. In line wih he inenaional compaison, Table also indicaes ha he ecen inancial wealh level o Hunaian households is sill elaively low. Based on he ane o esimaions, he aio o inancial wealh o income is likely o convee o he Poual o Geman values, which is aound.5, which is in line wih he assumpion o insiuional similaiies. Table Sucual beaks o wealh elemens Financial wealh only in cons. equaion Financial and housin wealh in cons. equaion HFW/PDI NFS/PDI HHW/PDI HI/PDI HFW/PDI NFS/PDI HHW/PDI HI/PDI Resuls ae in pecenae poins., NFS and HI denoe he annualized owh ae o income, ne inancial savins and housin invesmen especively. 8 The impoance o edisibuion in social welae expendiues, which has siniican eec on savin behavio is moe emphasized in Gemany and Hunay han in Anlo-Saxon counies. Fo insance, Queisse and Whiehouse (6 povide deailed compaison o pension sysems. 9 Jusiicaion o such an appoach could come om ECM-ype consumpion uncions. Incopoain inancial wealh in consumpion uncion is widespead, see o insance Muellbaue and Laimoe (995, Faan e al. ( amon ohes. Ae housin make booms in some counies i became ineviable ha inancial wealh is no suicien o explain he wealh eec on consumpion. As a esul, many maco models and analysis, such as Giouad and Blöndal (, Case e al. (5 and Paiella (7, incopoae housin wealh ino consumpion uncion. Unde he assumpion o lon-un homoeneiy he ECM-ype consumpion ensues sable consumpion/income and wealh/income aios. Theeoe, his diec esimaion beween wealh and income seeminly povides appopiae esuls. Gauss poam o compuin seady sae aios is downloadable om MNB OCCASIONAL PAPERS

18 MAGYAR NEMZETI BANK Anohe impoan implicaion is in connecion wih he inancial savins ae (NFS/PDI. This esimaion undepins he suesion o Zsoldos (997, namely he so-called savin miacle in he ealy and mid 9s, i.e. 5% o hihe inancial savin ae, was meely induced by he eallocaion beween housin and inancial wealh. Consequenly, unless anohe siniican shock occus, i is unlikely o expeience such a hih inancial savins ae aain. Conay o he inancial wealh, whee evey equilibium wealh aio is hihe han he acual one, he cuen shae o housin wealh is no evidenly below he equilibium level. Aain, he impoance o his esul is essenial when we evaluain how housin make and housin wealh eac o dieen shocks. 6 MNB OCCASIONAL PAPERS 68. 7

19 4. A simple model o housin make The above oulined empiical ess help o ideniy whehe daa eveal any siniican chanes o paens ha we expec based on inuiions. I so, i is woh checkin whehe hee is any heoeical explanaion o hese esuls. I no, i is essenial o ind heoeical undepinnins why ou expecaions ae no deecable in he daa. Since housin wealh o Hunaian households is consideable and sucual beak ess indicaed seveal beakpoins aound he housin subsidy scheme, he ollowin pa esablishes a modelin amewok in which he housin make plays cenal ole, heeoe, empiical indins can be pu ino economics pespecive. As Hunaian housin make was mainly inluenced by he ovenmenal subsidy scheme, Poeba (984 model, which is desined o analyze such subsidies, is an appopiae baseline amewok. Two basic equaions ae he no-abiae condiion, i.e. he eun on eal and inancial asses ae equal, and he ansiion equaion o housin sock (HS: Δ PH + = ( + δ PH + τ HS R( HS, = ( HS + Ψ( PH + δ ( ( whee PH, τ and δ denoe he eal o elaive house pice, he ax on housin and he depeciaion o housin sock. Since Hunaian housin subsidy scheme suppos households by he use o inees ae subsidy, we denoe his subsidy by s. In addiion, wo poins ae wohy o noe. Fis, his seup pays no aenion o he eecs o housin make on he ohe aspecs o households decision poblems. House pices also aec consumpion expendiue, see o insance Shille (4, Caoll e al. (6, and hence inancial savins. Second, he assumpion o he model is ha Ψ (., i.e. housin invesmen uncion, is inceasin in is only aumen, i.e. house pice. Noe ha hese omied acos can be aken ino accoun by he exension o Ψ (. uncion. Thee ae wo channels houh which house pice inluences he sa o new consucion. The one is he above-menioned subsiuion eec beween housin and consumpion. Appaenly, hihe house pice induces shi owad consumpion, heeoe, educes he oss savins, which is he sum o inancial savin and dwellin invesmen. The ohe channel is how he eun on housin, which is inluenced by house pice, aecs he households poolio allocaion beween inancial savin and dwellin invesmen. The hihe he chane in house pice he moe excess eun can be ealized on eal asses, heeoe, dwellin invesmen becomes moe aacive. Based on his line o easonin he model can be eomulaed he ollowin way: Δ PH + = ( + δ PH s R( HS, HS + = ( δ HS+ ( PH,, ( PDI C / PH ( ( whee PH denoes he owh ae o house pices. Evidenly, he ansiion equaion o inancial wealh (HFW is: HFW [ (, ]( PDI C + = ( + HFW + PH, ( In ode o close he model, one should noe ha he housin wealh, as i has consumpion value houh housin sevice, enes in uiliy uncion. The use o wealh elemens in uiliy uncion is also undepinned by Buce e al. (4 esimaion. Assumin CES uiliy uncion we obain U(C,HS = (C (σ /σ +HS (σ /σ σ /(σ, whee C and σ denoe he consumpion expendiue and he elasiciy o subsiuion, consequenly: C ln = σ ln HS ( PH, (4 Noe ha /PH >, as in Vadas (4, implies Ψ >and σ =educes he exended model o he oiinal Poeba model. MNB OCCASIONAL PAPERS

20 5. Theoeical descipion o wealh developmen To veiy he empiical esuls and sylized acs we esimae he paamees o he above descibed heoeical amewok on Hunaian daa (see he esimaion deails in Secion A. and simulae he eec o housin subsidy scheme. Neveheless, wo modelin deails have o be esablished. Fis, he ovenmenal subsidy scheme, as i was oulined, has aleed coninuously. Sein ha numbe o shocks would ende he evaluaion o impulse esponses cumbesome. Since he mos siniican eec on housin make was he exension o subsidy scheme o he second-hand housin make in, besides his was he yea when he moae loan bean o soa he model is shock by a pemanen decease in moae ae saed a Q. Second, in ode o ain pacical use o he model, he impulse esponse uncions and he daa have o be compaable. As hee is only one obsevaion o eal daa, i is challenin o eneae eal daa wihou shocks, i.e. baseline daa o house pices, housin sock, consumpion and inancial wealh. As o house pices, he main aco in invese demand uncion is he housin sock, moae ae, disposable income and populaion. Two ou o ou demand shies, namely pesonal disposable income and populaion, ae assumed o be unaeced by housin subsidy scheme Since house pice can eac o any shocks immediaely, he eec o housin sock and moae ae can be illed ou by keepin he aio o house pice o disposable income imes populaion consan a is Q level. To pu i dieenly we assume ha i he subsidy scheme had no been inoduced evey lucuaion in house pices would have been caused by he vaiaions o disposable income and populaion. Consequenly, any chane in house pice/income populaion elaive o is value in Q is esuled by he subsidy scheme ha ales he housin sock and moae ae. Since he housin sock adjuss sluishly he above ick canno be applied o he housin sock. A possible way o eneae baseline ac would be o se up an empiical equaion in which he ih hand side vaiables conains income, populaion ec. and eneae oecas wih unaleed moae ae. Unounaely, in his appoach we implicily eomulae he model; heeoe, insead o baseline ac we obain he baseline o he model. Consequenly, only univaiae mehods ae applicable so he mos common appoach, HP ile is invoked. The appaen cavea o HP ile is ha i oveesimaes end values when he sample ends in posiive cyclical phase. To conol his phenomenon we esimae a simple linea ime end up o 999 Q4 and eneae ou-o-sample oecas. Obviously, he oecased end values ae seiously undeesimaed as he subsanial incease in income owh since is compleely omied. Neveheless, he wo cyclical componens depic easonably same paen hence we use he HP ileed values. Alhouh he consumpion expendiue, due o habi omaion, may no adjus as as as house pices do, howeve simila appoach is jusiiable. The main demand shies o aeae consumpion ae eal income, inancial and housin wealh. Amon hese acos only income is unaleed by housin subsidy scheme, heeoe, any chane in he aio o consumpion o income elaive o is value in :q is consideed as he eec o subsidy scheme on consumpion. Finally, he baseline ac o inancial wealh has o be ideniied. Founaely, as he lowe-ih panel o Fiue clealy eveals, he sanaion o inancial wealh/income is owin o he exension o housin loan. So we assume ha households savin behavio emain he same as i was beoe and he aio o inancial wealh o income convees o he Poual value, i.e. 5 pecenae. This conveence pah implies 6 pecen inancial wealh pe income aio a he end o 6. Wih he ac baseline in hand he ac impulse esponse can be compued. The impulse esponse o he model is based on 5 pecenae poin pemanen decease in moae loan ae, which is a easonable poxy o he dieence beween unsuppoed and suppoed inees ae o housin loan. Thouhou he simulaion execise, we compae he acs and wo model esuls: in which hee is no subsiuion beween consumpion and housin (σ = ha is he Poeba (984 model and in which σ =.8. Boh acs and simulaed house pices display a clea paen o oveshooin. Obviously, in he case o no subsiuion eec, all ovenmen subsidy emains in housin make inducin moe dwellin invesmen and hence hihe housin sock, which in un, educes he housin Hih owne-occupancy ae in Hunay implies minuscule income om enal ees hence house pice lucuaion ales he disposable income mainally. 8 MNB OCCASIONAL PAPERS 68. 7

21 THEORETICAL DESCRIPTION OF WEALTH DEVELOPMENT pice in ase pace. The modeae esponse o housin sock is owin o seveal acos. Fis, he iniial level o housin wealh was hih in Hunay, heeoe, simulain a vaiable ha is no below is seady sae level is likely o eneae modeae eec only. Second, housin sock, hence housin supply, is eniely inelasic in sho-un, consequenly he immediae eec o hihe demand eneaed by housin subsidy scheme is he soain house pices meely. Fuhemoe housin sock adjus slowly, heeoe, even such a consideable pice incease induces eeble esponse in housin sock in medium-un. Even houh ha eneous subsidy scheme had been mainained, he lon-un incease in housin sock would have been pecen hihe only. The conveence o he new equilibium level would have aken 4 yeas while he hallie is 9 yeas. Accompanyin his slow adjusmen wih he ihenin o subsidy scheme a he end o, which is clealy econizable in ac house pices, i is no supisin why empiical es did no eveal any siniican incease in housin sock. Concisely, housin subsidy scheme has is majo eec on house pices ahe han housin sock. Housin subsidy scheme deiniely inluenced boh consumpion and inancial savin decisions. As o consumpion, he oiinal Poeba does no sues anyhin abou consumpion, howeve i would be uneasonable o assume complee independence. Theeoe, consumpion is allowed o esponse o wealh eec bu we exclude subsiuion eec. Evidenly, Cha 6 Simulaion esuls Pe cen Pe cen PH ac PH (sima= PH (sima=.8 HS ac HS (sima= HS (sima=.8 Pe cen Pe cen C ac C (sima= C (sima= HFW/PDI ac HFW/PDI (sima= HFW/PDI (sima=.8 Thee is mainal dieence in simulaion uns in lon-un. The discepancy beween he new housin sock levels is wihin. pecen. MNB OCCASIONAL PAPERS

22 MAGYAR NEMZETI BANK moe consideable consumpion esponse is obseved when boh eecs ae pesened. Alhouh, housin subsidy scheme had a siniican eec on consumpion expendiue i is no enouh by isel o explain he consumpion boom in Hunay. One o he omied acos is he households pecepion abou hei cuen siuaions. The consideable upsue o disposable income in ealy pobably inceased households willinness o consume moe ou o hei income and wealh. The hih popensiy o consume ou o wealh is undepinned by simulaion esuls. Even in he pesence o subsiuion eec, he simulaed inancial wealh aes ae hihe han he acs indicain ha he opimisic aiude o households encouae hem o ake ou loans o inance uhe incease in consumpion. Based on hese esuls we can conclude ha he savin disase, i.e. nea o zeo o even neaive inancial savin ae, expeienced in ealy s, o a ceain exend, is he ohe side o he savins miacle o ealy 9 s. While in he ealy 9 s households eaaned hei wealh om housin o inancial wealh implyin deceasin eal house pices and housin wealh, om he inceasin demand o housin and soain house pices, via housin loan, vanished inancial savins. Unounaely, his eallocaion did no induce hihe housin sock paly because he iniial housin wealh was hih hence he pimay eec was inceasin house pices and paly because i would have equied exemely lon ime o each he new, ohewise mainally hihe equilibium level. Households conidence index eached is all-ime hih value in. MNB OCCASIONAL PAPERS 68. 7

23 6. Summay The aim o his sudy was o conduc hoouh evaluaion o he enie wealh o Hunaian households and o challene he uban leend abou households wealh by evaluain is developmen in connecion wih economic evens. In ode o do so, he socks o housin and consume duables ae also pesened. Accodin o ou appoximaions, he housin wealh in 5 is slihly moe han hee imes as hih as annual income, meanwhile he duable consumpion ood wealh is appoximaely 6 pecenae o he annual income. Puin hese oehe wih inancial wealh he oal wealh o Hunaian households is ouhly ive imes as hih as annual income. Since he housin wealh is a leas hee imes bie han he nex wealh elemen, which is he inancial wealh, he oveall paen o households wealh is deemined by housin wealh. Based on he implied equilibium aios o ECM om consumpion uncion, i seems he ecen wealh level o Hunaian households is sill elaively low; as he seady sae aio is aound 5 pecenae o annual pesonal income, which is close o Geman o Pouuese levels. Conay, he cuen shae o housin wealh is no evidenly below he equilibium level. Even houh he inancial asse/income aio coninues o incease alon he same end he households liabiliies have expanded a hihe pace since implyin ha he aio o ne inancial wealh o income emained a he same level since hen. I is appaen ha he savin disase, o a ceain exen, is he ohe side o he savins miacle o ealy 9 s. The ovenmenal housin subsidy scheme inceased demand o housin and induced mainly soain house pices, which, via housin loan, vanished inancial savins. Neveheless, ou empiical esuls and model simulaion indicae mainal eec on housin sock, which is owin o seveal acos. Fis, he iniial level o housin wealh was hih in Hunay, heeoe, simulain a vaiable ha is no below is seady sae level is likely o eneae modeae eec only. Second, housin sock adjuss slowly. Even a consideable pice incease induces eeble esponse in housin sock in sho-un. Conveence o he new equilibium level, in which he housin sock would have been pecen hihe only, would have aken 4 yeas. Accompanyin his slow adjusmen wih he ihenin o subsidy scheme a he end o i is no supisin why we canno deec any siniican incease in housin sock. MNB OCCASIONAL PAPERS 68. 7

24 Reeences AOKI, PROUDMAN AND VLIEGHE (4: House Pice, Consumpion and Moneay Policy: a Financial Acceleao Appoach, Jounal o Financial Inemediaion (4, pp ARON, J. AND MUELLBAUER, J. (6a: Esimaes o Household Seco Wealh o Souh Aica, 97. Review o Income and Wealh, Vol. 5, No. : Inenaional Associaion o Reseach in Income and Wealh, June, pp ARON, J. AND MUELLBAUER, J. (6b: Housin Wealh, Cedi Condiions and Consumpion, CSAE Wokin Pape No. WPS/6-8. BAI, J. AND PERRON, P. (996: Esimain and Tesin Linea Models wih Muliple Sucual Chanes, Economeica, 998, vol 66, pp BAI, J. AND PERRON, P. (: Compuaion and Analysis o Muliple Sucual Chane Models, Jounal o Applied Economeics, 8, pp.. BENK, SZ., JAKAB, M. Z., KOVÁCS, M. A, PÁRKÁNYI, B., REPPA, Z. AND VADAS, G. (6: The Hunaian Quaely Pojecion Model (NEM, MNB Occasional Papes No. 6., Decembe 6, Maya Nemzei Bank. BRUCE, H., MUFFELS, R., AND WOODEN, M. (4: Money Doesn Buy Happiness... O Does I? A Reconsideaion Based on he Combined Eecs o Wealh, Income and Consumpion, IZA Discussion Pape No. 8 July, 4. CAMERON, G., MUELLBAUER, J. AND MURPHY, A. (6: Was Thee a Biish House Pice Bubble? Evidence om a Reional Panel, CEPR Discussion Papes No. 569 CARDOSO, F. AND DA CUNHA, V. G. (5: Household Wealh in Poual: 98-4, Wokin Pape No. 4-5, June 5, Banco de Poual. CARROLL, C. D., OTSUKA, M. AND SLACALEK, J. (6: How Lae Is he Housin Wealh Eec? A New Appoach, NBER Wokin Pape No. W746 Decembe 6. CASE, K., QUIGLEY, J. AND SHILLER, R. (5: Compain Wealh Eecs: The Sock Make vesus he Housin Make, Advances in Macoeconomics, Bekeley Eleconic Pess, vol. 5(, pp FAGAN, G., HENRY, J. AND MESTR, R. (: An Aea-wide Model (AWM o he Euo Aea, Wokin Pape No. 4, Euopean Cenal Bank. GIROUARD, N. AND BLÖNDAL, S. (: House pice and economic aciviy, Economic Depamen Wokin Pape No. 79, OECD. HUMAN DEVELOPMENT REPORT (6: Unied Naions Developmen Poamme (UNDP. HUNGARIAN CENTRAL STATISTICAL OFFICE (: Real esae daa ile, Hunaian house pices , ImmoPess-KSH. JUHL, T. AND XIAO, Z. (5: A Nonpaameic Tes o Chanin Tends, Jounal o Economeics, 7, pp KIRSANOVA, T. AND SEFTON, J. (7: A Compaison o Naional Savin Raes in he UK, US and Ialy, Euopean Economic Review, in pess. MNB OCCASIONAL PAPERS 68. 7

25 REFERENCES KISS, G. AND VADAS, G. (7: The Role o he Housin Make in Moneay Tansmission Evidence om Hunay, Euopean Jounal o Housin Policy, Volume 7, Issue Sepembe 7, pp KISS, G. AND VADAS, G. (7: On he Inoducion o Housin Popey Tax in Hunay, mimeo, MNB. MUELLBAUER, J. AND LATTIMORE, R. (995: The Consumpion Funcion: a Theoeical and Empiical Oveview, Handbook o Applied Economeics, Macoeconomics, Blackwell. NIEMELÄINEN, S., SANDSTRÖM, T., SÄYLÄ, M. AND TÖRMÄLEHTO V. (6: Housin Wealh in Finland, Pape pepaed o he 9h Geneal Coneence o The Inenaional Associaion o Reseach in Income and Wealh, Joensuu, Finland, Auus 6, 6. O. BERGE, T., GODDING BOYE, K., HENNING JACOBSEN, D., LINDQUIST. K. AND SKJÆVELAND, M. (6: Measuin and pedicin household housin wealh, Sa Memo No. 6/4, Ocobe 6, Noes Bank. PAIELLA, M. (7: Does wealh aec consumpion? Evidence o Ialy, Jounal o Macoeconomics 9, 7 pp POTERBA, J. M. (984: Tax subsidies o owne-occupied housin: an asse make appoach, Quaely Jounal o Economics 99 (Novembe, pp PULA, G. (: Capial Sock Esimaion in Hunay: A Bie Descipion o Mehodoly and Resuls, MNB Wokin Pape No. /7, Maya Nemzei Bank. QUEISSER., M. AND WHITEHOUSE, E. (6: Neual o Fai?: Acuaial Conceps and Pension-Sysem Desin, OECD Social Employmen and Miaion Wokin Papes 4, OECD Diecoae o Employmen, Labou and Social Aais. SHILLER, R. J. (4: Household Reacion o Chanes in Housin Wealh (Apil 4, Cowles Foundaion Discussion Pape No VADAS, G. (4: Modellin Households Savins and Dwellins Invesmen a Poolio Choice Appoach, Inenaional Real Esae Review, Wine 4, Vol. 7, No., pp. 55. WU, W. B. (4: A es o deecin chanes in mean. In: IMA Volume 9 (Edios: D. R. Billine E. A. Robinson and F. Schoenbe, Time seies analysis and applicaions o eophysical sysems, pp. 5-. WU, W. B. AND ZHAO, Z. (6: Ineence o Tends in Time Seies, o Appea Jounal o he Royal Saisical Sociey, Seies B. (ohcomin. ZSOLDOS, I. (997: A lakossái meakaíási és poólió dönései Mayaoszáon közö, MNB Wokin Pape No. 997/4, Maya Nemzei Bank, (only in Hunaian. MNB OCCASIONAL PAPERS 68. 7

26 A. Appendix A.. ESTIMATION OF HOUSEHOLDS WEALTH One o he pimay oals o his sudy is o povide esimaion o inancial wealh, housin wealh and he sock o duable consumpion oods o Hunaian households. Founaely, as we menioned above he inancial wealh o households is accessible. On he conay neihe housin no duable consumpion sock is available. The ollowin pa povides esimaions o hese wealh elemens. Obviously, hese appoximaions could be suiable o any heoeical o empiical analysis, howeve canno be consideed as oicial saisics. A... Housin wealh esimaion Since hee is no oicial daa o housin wealh i has o be esimaed based on he available daa. In heoy, his esimaion is a sole mae o muliplicaion: HHW = HS A PH whee HHW, HS, A and PH denoe households housin wealh, numbe o apamens, i.e. housin sock, aveae apamen size and aveae pice pe squae mee. The challenin issue is o obain hese daa. As o he housin sock, he iniial poin is he censuses o numbe o las and houses in Hunay. Theses suveys wee conduced by Hunaian Cenal Saisical Oice (HCSO in 99 and. Usin he quaely saisic o inished consucions and demoliions o dwellins he missin sock daa beween and ae hese daes can be compued. Founaely, he aveae apamen size is also published by HCSO. As o aveae pice pe squae mee i is diicul o obain applicable pice. HCSO publishes a yeabook on house pices sain om 997; howeve his conains squae mee pices only o hose sees whee a leas hee eal esaes have been sold. These daa ae based on he oicial ecod o Hunaian Duies Oice. Since only he couny-level housin socks ae available, aveae house pice ime seies has o be ceaed. Usin he unpocessed HCSO daa he necessay aeaion can be done in wo seps. Fis, eoneous ecods have o be ileed ou. We conside a ecod valid i he size o he la is beween and 6 squae mee and is pice is beween and 6 million HUF and he squae mee pice is beween 5 housand and million HUF. Noe ha all o he hee condiions used simulaneously can ideniy he poblemaic ecods. Second, aveae house pices ae calculaed by escalin he couny level ansacions wih he counies housin socks. A... The sock o consume duables Thee ae wo saisics a ou disposal ha can be exploied o esimae he sock o consume duables: he cuen expendiue on duable consumpion oods and he numbe o duable oods pe -household. Alhouh he lae one could seem pomisin, daa such as hee ae 5 cas in households is ahe insuicien because we have o ind aveae pice o evey duable banch o all peiods. Consequenly, we apply a pepeual invesmen mehod as in he Hunaian capial sock esimaion o Pula (, howeve we assume ha he duaion o consume duables ollows a Weibull disibuion. Theeoe, he sock o hese oods is deemined by he expendiue on duables muliplied by he suvivo uncion: HDW = S s= C D s k [ ( s ], exp λ whee C D, k, λ and S denoe he spendin on duable consumpion, he shape and scale paamees o Weibull disibuion and he scappin ae especively. Spendin on duable consumpion is available om 995 o 4. Founaely, he aio o duable oods expendiue o he enie consumpion is easonably sable. I says beween 4 and 5 pecen unil 4 MNB OCCASIONAL PAPERS 68. 7