The Relationship between Consumption and Wealth: A Quantile Regression Approach

Fredj Jawadi and Ricardo Sousa

Revue d'économie politique, 2014, vol. 124, issue 4, 639-652

Abstract: This paper examines the wealth effects on consumption for the US, the UK and the Euro area using linear models and quantile regression approaches. We find that the elasticity of consumption with respect to aggregate wealth is largest for the UK, but housing wealth effects do not seem to be relevant in the Euro area. In addition, the sensitivity of consumption to changes in wealth is stronger when consumption growth is abnormally high. Overall, our results suggest that the link between consumption and wealth is significantly different across the distribution of consumption growth.

Keywords: consumption; wealth (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (19)

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