## Analyzing the Effects of Financial and Housing Wealth on Consumption using Micro Data

_IMF Working Papers, May 24, 2019_

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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

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### 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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_Source: https://www.imf.org/en/publications/wp/issues/2019/05/24/analyzing-the-effects-of-financial-and-housing-wealth-on-consumption-using-micro-data-46920_