EconPapers    
Economics at your fingertips  
 

Wealth Effects on Consumption in Austria

Gerhard Fenz () and Pirmin Fessler ()
Additional contact information
Gerhard Fenz: Oesterreichische Nationalbank, Economic Analysis Divison, http://www.oenb.at

Monetary Policy & the Economy, 2008, issue 4, 68–84

Abstract: Between the start of the financial crisis in the third quarter of 2007 and the third quarter of 2008, Austrian household sector losses arising from investment in tradable securities amounted to approximately EUR 24 billion. This study uses micro and macro data to examine the possible consequences of this loss of wealth on the consumption behavior of households. Micro data for Austria indicate that owing to unequal distribution, it is primarily the wealthier households that have been directly affected by the crisis. However, all households may be impacted by the consequences of the financial crisis via confidence effects, irrespective of whether they hold securities or not. Estimates based on macro data show that the marginal propensity to consume out of wealth of Austrian households is 0.05 and thus within the international average. Results of Oesterreichische Nationalbank (OeNB) simulations using a macroeconometric model indicate that a decrease in wealth has a relatively minor effect on private consumption and economic growth in Austria. Moreover, this effect only occurs with a substantial lag. Due to the historic singularity of the current financial crisis, however, above all the indirect confidence effects could be more intense than estimated.

Keywords: wealth effects; financial wealth; marginal propensity to consume out of wealth; saving behavior; financial crisis (search for similar items in EconPapers)
JEL-codes: E21 E44 D14 D10 D31 (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Downloads: (external link)
https://www.oenb.at/dam/jcr:268a330e-d9e8-4a0c-8b8 ... s_04_tcm16-97558.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:onb:oenbmp:y:2008:i:4:b:4

Ordering information: This journal article can be ordered from
Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria

Access Statistics for this article

Monetary Policy & the Economy is currently edited by Doris Ritzberger-Gruenwald and Ernest Gnan

More articles in Monetary Policy & the Economy from Oesterreichische Nationalbank (Austrian Central Bank) P.O. Box 61, A-1011 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Claudia Kwapil ().

 
Page updated 2019-11-12
Handle: RePEc:onb:oenbmp:y:2008:i:4:b:4