Does Wealth Affect Consumption?
Author : Monica Paiella
Publisher :
Page : 56 pages
File Size : 26,7 MB
Release : 2004
Category : Consumption (Economics)
ISBN :
Author : Monica Paiella
Publisher :
Page : 56 pages
File Size : 26,7 MB
Release : 2004
Category : Consumption (Economics)
ISBN :
Author : Carlos Caceres
Publisher : International Monetary Fund
Page : 32 pages
File Size : 50,90 MB
Release : 2019-05-24
Category : Business & Economics
ISBN : 1498316476
This paper analyzes the existence of “wealth effects” derived from net equity (in the form of housing, financial assets, and total net worth) on consumption. The study uses longitudinal household-level data?from the Panel Study of Income Dynamics (PSID) ?covering about 7,000-9,000 households in the U.S., with the estimations carried over the period 1999-2017. Overall, wealth effects are found to be relatively large and significant for housing wealth, but less so for other types of wealth, including stocks. Furthermore, the analysis shows how these estimated marginal propensities to consume (MPC) from wealth are closely linked to household characteristics, including income and demographic factors. Finally, underlying structural changes in household characteristics point to potentially lower aggregate MPCs from wealth going forward.
Author : Jeffrey M. Chwieroth
Publisher : Cambridge University Press
Page : 597 pages
File Size : 30,90 MB
Release : 2019-03-21
Category : Business & Economics
ISBN : 1107153743
Shows how the politics of banking crises has been transformed by the growing 'great expectations' among middle class voters that governments should protect their wealth.
Author : R. Tiff Macklem
Publisher :
Page : 67 pages
File Size : 45,41 MB
Release : 1994
Category : Canada
ISBN : 9780662225034
This report develops a measure of aggregate private sector wealth in Canada that includes financial, physical, and human wealth, and examines the ability of this wealth measure to explain aggregate consumption. The relationship between consumption and wealth is explored both to gauge the usefulness of the wealth measures developed and to improve upon empirical consumption models for Canada. The study augments the standard EC consumption model with a comprehensive measure of wealth, thus partly bridging the gap between life cycle-permanent income consumption equations and the more empirically motivated EC consumption models based on disposable income.
Author : Martin Lettau
Publisher :
Page : 21 pages
File Size : 22,54 MB
Release : 2003
Category : Business enterprises
ISBN :
Abstract: Both textbook economics and common sense teach us that the value of household wealth should be related to consumer spending. At the same time, movements in asset values often seem disassociated with important movements in consumer spending, as episodes such as the 1987 stock market crash and the contraction in equity values that occurred in the fall of 1998 suggest. An important first step in understanding the consumption-wealth linkage is determining how closely the two variables are actually correlated, and whether there exist important movements in asset values that are not associated with changes in consumption. This paper provides evidence that a surprisingly small fraction of the variation in household net worth is related to variation in aggregate consumer spending. We use empirical techniques that allow us to quantify the relative importance of permanent and transitory innovations in the variation of consumer spending and wealth and find that transitory shocks dominate post-war variation in wealth, while permanent shocks dominate variation in aggregate consumption. Although transitory innovations are found to have little influence on consumer spending, they have long-lasting effects on wealth, exhibiting a half-life of a little over two years. The findings suggest that most macro models which make no allowance for transitory variation in wealth that is orthogonal to consumption are likely to misstate both the timing and magnitude of the consumption-wealth linkage.
Author : Chris Carroll
Publisher :
Page : 36 pages
File Size : 34,99 MB
Release : 2006
Category : Consumption (Economics)
ISBN :
This paper presents a simple new method for estimating the size of 'wealth effects' on aggregate consumption. The method exploits the well-documented sluggishness of consumption growth (often interpreted as 'habits' in the asset pricing literature) to distinguish between short-run and long-run wealth effects. In U.S. data, we estimate that the immediate (next-quarter) marginal propensity to consume from a $1 change in housing wealth is about 2 cents, with a final long-run effect around 9 cents. Consistent with several recent studies, we find a housing wealth effect that is substantially larger than the stock wealth effect. We believe that our approach is preferable to the currently popular cointegration- based estimation methods, because neither theory nor evidence justifies faith in the existence of a stable cointegrating vector.
Author : Olivier de Bandt
Publisher : Springer Science & Business Media
Page : 416 pages
File Size : 15,75 MB
Release : 2010-10-14
Category : Business & Economics
ISBN : 3642153402
During the recession in the years 2008-2009, the most severe for mature economies in the post-war period, housing markets were often mentioned as having a special responsibility. The objective of this book is to shed light on the cyclical behaviour of the housing markets, its fundamental determinants in terms of supply and demand characteristics, and its relationship with the overall business cycle. The co-movements of house prices across countries are also considered, as well as the channel of transmission of house price changes to the rest of the economy. Particular attention is paid to the effects on private consumption, through possible wealth effects. The book is a compilation of original papers produced by economists and researchers from the four main national central banks in the euro area, also with the participation of leading academics.
Author : Tullio Jappelli
Publisher : Oxford University Press
Page : 313 pages
File Size : 11,64 MB
Release : 2017
Category : Business & Economics
ISBN : 0199383154
In The Economics of Consumption, Tullio Jappelli and Luigi Pistaferri provide a comprehensive examination of the most important developments in the field of consumption decisions and evaluate economic models against empirical evidence.
Author : Laura Jaramillo
Publisher : International Monetary Fund
Page : 30 pages
File Size : 41,67 MB
Release : 2015-05-26
Category : Business & Economics
ISBN : 151358474X
We attempt to disentangle income and wealth effects on consumption by disaggregating both the different types of income and wealth. We estimate a consumption function for a panel of quarterly data for 14 advanced economies spanning 1998 to 2012, using an error correction specification. We find a significant long-term relation between consumption and the different components of income and wealth. While fiscal policy had direct effects on consumption, the analysis suggests that wealth effects were sizeable, and therefore need to be kept in mind when analyzing consumption trends going forward.
Author :
Publisher :
Page : 32 pages
File Size : 23,73 MB
Release : 1994
Category : Crops and climate
ISBN :