Households' response to wealth changes; do gains or losses make a difference

Mauro Mastrogiacomo, R.P. Berben and Kerstin Bernoth ()

No 63, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: We estimate the excess impact of financial asset capital losses relative to gains on household active savings and durable goods consumption in the Netherlands. We estimate the excess impact of financial asset capital losses relative to gains on household active savings and durable goods consumption in the Netherlands. The sample period covers both the stock-market boom during the 90's, and the bear period afterwards. The results suggest that households react more to capital losses than to capital gains. Failing to take into account this asymmetry may seriously bias the estimates of the marginal propensity to consume out of wealth.

JEL-codes: D12 E21 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-fmk and nep-mac
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Citations: View citations in EconPapers (21)

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Chapter: Households' response to wealth changes: do gains or losses make a difference? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:63

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