Households' Response to Wealth Changes: Do Gains or Losses make a Difference?
Kerstin Bernoth () and
DNB Working Papers from Netherlands Central Bank, Research Department
We estimate the excess impact of financial asset capital losses relative to gains on household active savings and durable goods consumption in the Netherlands. The sample period covers both the stock market boom during the 90's, and the bear period afterwards. The results suggest that households react more to capital losses than to capital gains. Failing to take into account this asymmetry may seriously bias the estimates of the marginal propensity to consume out of wealth.
Keywords: Household savings; wealth effect; capital gains (search for similar items in EconPapers)
JEL-codes: D12 E21 (search for similar items in EconPapers)
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Chapter: Households' response to wealth changes: do gains or losses make a difference? (2007)
Working Paper: Households' response to wealth changes; do gains or losses make a difference (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:090
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