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Is Wealth Increasingly Driving Consuption?

Tamim Bayoumi and Hali Edison ()

DNB Staff Reports (discontinued) from Netherlands Central Bank

Abstract: This paper estimates the wealth effect on consumption of both equity and housing wealth, Using data across 16 industrial countries differentiated by type of financial system and examining trends in these wealth effects over time. The three main conclusions are found and their policy implications discussed: that the impact of a $1 increase in housing wealth on consumption is higher than the equivalent increase in equity wealth; countries with market- based financial systems have larger effects from changes in equity wealth than those with bank-based financial systems; and that the size of the wealth effects appears to be rising over time, probably reflecting financial deregulation.

Keywords: Wealth effects; household wealth; consumption; stock ownership; housing (search for similar items in EconPapers)
JEL-codes: E20 E44 (search for similar items in EconPapers)
Date: 2003
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