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Title: |
The Hyper-inflation of Land and Consumption
Behavior |
| Author: |
Park, Chan Il;
Kwon, Jene K. |
| Author
Affiliation: |
Korea Econ
Research Institute; Northern IL U |
| Source: |
International Economic Journal, Winter 1996, v. 10, no. 4, pp. 47-58 |
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Publication Date: |
Winter 1996 |
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Abstract: |
Using the Korean data (1975-1991), this
study shows that the hyper-appreciation of land prices can have a
significant effect on private consumption. The test for a structural
shift in the consumption function indicates that remarkable changes in
consumption behavior are due to windfall gains from land ownership. The
overall finding is consistent with a modified life cycle-permanent
income hypothesis in an imperfect financial environment. When capital
markets are imperfect and the land price inflation in rampant, optimal
consumption depends less on the traditional life-cycle variable, and
more on current income and a windfall gain. |
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