Are Wealth Effects Important for Canada

Lise Pichette ()

Bank of Canada Review, 2004, vol. 2004, issue Spring, 29-35

Abstract: Some analysts believe that a sharp rise in equity values was an important factor in the strong consumer spending between 1995 and 2000. Empirical evidence suggests, however, that consumer spending responds more to changes in housing wealth than it does to equity wealth. Pichette reports findings from an earlier study by Pichette and Tremblay (2003) which used a vector-error-correction model to determine the long-run relationship between various components of wealth and consumer spending. The study found that consumption does not respond significantly to a permanent increase in stock market wealth, while a permanent increase in housing wealth leads to a significant rise in consumption. These findings suggest important implications for monetary policy decision-makers, since movements in wealth will also affect aggregate demand and inflation.

Date: 2004
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://www.bankofcanada.ca/wp-content/uploads/2010/06/pichettee.pdf full text (application/pdf)

Related works:
Working Paper: Are Wealth Effects Important for Canada? (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bca:bcarev:v:2004:y:2004:i:spring04:p:29-35

Access Statistics for this article

More articles in Bank of Canada Review from Bank of Canada 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada. Contact information at EDIRC.
Bibliographic data for series maintained by ().