Abstract

We study how changes in housing wealth affect household spending using administrative and granular, de-identified, data on debit card payments and e-invoices for the near population of Norway. We focus on the 2014 oil-price collapse, which created sharpregional variation in house prices. Comparing government workers in oil and non-oil regions, we estimate a three-year marginal propensity to spend (MPX) of about 3.6 cents per dollar. The response is highly concentrated in durables, home improvements, furnishings, and vehicles, and primarily driven by a reduction in the uptake of credit backed by home-equity. The local MPX (L-MPX), the share of the total spending response accruing to locally produced goods and services, stands for roughly 80% of the consumption decline. Additional findings highlight both collateral and wealth effects as key channels linking housing wealth to consumption, and document that household balance-sheet heterogeneity shapes the propagation of housing-wealth shocks.