Wealth effect in the US: evidence from the combination of two surveys

Simone Salotti

MPRA Paper from University Library of Munich, Germany

Abstract: This article investigates how wealth affected household consumption in the USA in the period 1989-2007. Previous empirical results are mixed, mostly because of the low quality of the data more readily available. We combine information from the Consumer Expenditure Survey and the Survey of Consumer Finances to perform a detailed analysis on the effects of several types of wealth on consumption. Our estimates indicate that there is a significant tangible wealth effect, while financial wealth seems to affect consumption mainly for the richer part of the population. Both effects are larger during periods of prices booms. Older households experience a higher wealth effect out of the house of residence with respect to the younger ones. Finally, a sort of myopic behavior emerges, since households seem to disregard net wealth and decide about consumption looking at gross wealth only.

Keywords: Consumption; Household Wealth; Wealth Effect; Sample combination. (search for similar items in EconPapers)
JEL-codes: D12 E21 (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/27352/1/MPRA_paper_27352.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/56984/1/MPRA_paper_56984.pdf revised version (application/pdf)

Related works:
Journal Article: Wealth Effects in the US: Evidence from the Combination of Two Surveys (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:27352

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