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The Wealth Effect in the Eurozone

Óscar Rodil-Marzábal () and Vicente Menezes-Ferreira-Junior ()
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Óscar Rodil-Marzábal: The Wealth Effect in the Eurozone Department of Applied Economics, University of Santiago de Compostela, Spain
Vicente Menezes-Ferreira-Junior: Banco Central do Brasil, Brazil

Authors registered in the RePEc Author Service: Oscar Rodil-Marzabal ()

Panoeconomicus, 2016, vol. 63, issue 1, 87-112

Abstract: The recent global financial crisis represents a serious threat to the growth of economies. This crisis deeply affects the real economy through a phenomenon known as the wealth effect, which assumes that a fall in wealth leads to a reduction of private consumption. Thus, this paper analyzes the wealth effect on consumption using quarterly macro-data for 10 Eurozone countries in the period 2000-2010. The results suggest the existence of a posi- tive and significant wealth effect on consumption with the predominance of a financial effect on housing, showing larger consumption sensitivity to changes in the value of financial assets.

Keywords: Wealth; Consumption; Crisis; Eurozone (search for similar items in EconPapers)
JEL-codes: E21 G01 O52 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:voj:journl:v:63:y:2016:i:1:p:87-112