Dynamics of Wealth and Consumption: New and Improved Measures for U.S. States

Zhou Xia () and Christopher Carroll
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Zhou Xia: Fannie Mae

The B.E. Journal of Macroeconomics, 2012, vol. 12, issue 2, 44

Abstract: Case, Quigley, and Shiller (2005) persuasively argue that the well-known conceptual difficulties in measuring aggregate “wealth effects” might be lessened by the use of state-level data. Unfortunately, the data required for a convincing implementation of their idea have been either virtually nonexistent (for financial wealth) or of questionable quality (for consumption). Our main contributions are to provide the first directly observed panel data on financial wealth at the state level, and to construct improved measures of state-level spending growth. Using these data, we estimate rudimentary “wealth effects” regressions that find a strong relationship between twice-lagged housing wealth growth and current spending growth, but we find no relationship between lagged financial wealth growth and current spending growth.

Keywords: housing wealth effect; financial wealth effect; regional economic analysis (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (29)

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DOI: 10.1515/1935-1690.2403

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