Analyzing the Effects of Financial and Housing Wealth on Consumption using Micro Data
IMF Working Papers, May 24, 2019
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- Analyzing the Effects of Financial and Housing Wealth on Consumption using Micro Data
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Bibliographic details
- Authors: Carlos Caceres
- Published: May 24, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498316477.001
Study design and data
- Paper author: Carlos Caceres
- Publication date: May 24, 2019
- Data source: Panel Study of Income Dynamics (PSID)
- Sample size: covering about 7,000-9,000 households in the U.S.
- Estimation period: 1999-2017
- Pages: 32
- Volume: 2019
- Issue: 115
- Series: Working Paper No. 2019/115
- DOI: https://doi.org/10.5089/9781498316477.001
- Stock No: WPIEA2019115
- ISBN: 9781498316477
- ISSN: 1018-5941
Key findings on wealth effects and MPCs
- Wealth effects are relatively large and significant for housing wealth.
- Wealth effects are less pronounced for other types of wealth, including stocks.
- Estimated marginal propensities to consume (MPC) from wealth are closely linked to household characteristics, including income and demographic factors.
- Underlying structural changes in household characteristics point to potentially lower aggregate MPCs from wealth going forward.
Subject areas and keywords
- Subject: Consumption, Household consumption, Housing, Housing prices, Income, National accounts, Prices
- Keywords: consumption, core estimation, financial asset, Global, home equity, Household consumption, household surveys, Housing, housing and financial wealth, Housing prices, housing wealth, Income, income distribution, MPC, MPC estimate, nonfinancial wealth, price, WP
Implications (from analysis)
- Housing wealth is the primary driver of measurable wealth effects on consumption within the studied sample and period.
- Heterogeneity in MPCs by income and demographic characteristics implies distributional considerations are important when assessing aggregate consumption responses to wealth changes.
- Structural shifts in household composition and characteristics may reduce aggregate MPCs from wealth in the future.
Source: IMF Working Papers — "Analyzing the Effects of Financial and Housing Wealth on Consumption using Micro Data", Carlos Caceres, May 24, 2019.
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