Wealth Effects and Consumption in Thailand

Phurichai Rungcharoenkitkul

No 2011-01, Working Papers from Monetary Policy Group, Bank of Thailand

Abstract: The effects of changes in wealth on consumption in Thailand are estimated, using a cross-sectional household survey conducted in 2010. It is found that consumption, after conditioning for income and household characteristics, is increasing in wealth, whether measured in terms of net worth or gross asset values. The estimated elasticity of consumption with respect to wealth is 0.06, while the estimated income elasticity is 0.60. The corresponding marginal propensity to consume out of wealth is estimated to be around 0.02-0.03. Physical assets, such as housing, matter for consumption more than financial assets, with the elasticity being about five-fold larger. Durable goods consumption is found to be much more sensitive to wealth than consumption of non-durable goods. The paper also discusses evidence that wealth e ects may vary across households, and can be explained by the levels of existing wealth and certain household characteristics.

Keywords: consumption; wealth effects (search for similar items in EconPapers)
JEL-codes: C21 D91 E21 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2011-01
New Economics Papers: this item is included in nep-dev, nep-mac and nep-sea
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Citations: View citations in EconPapers (3)

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