The decline in household saving and the wealth effect

F. Juster, Joseph Lupton (), James Smith and Frank Stafford

No 2004-32, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Using a unique set of household level panel data, we estimate the effect of capital gains on saving by asset type, controlling for observable and unobservable household specific fixed effects. The results suggest that the decline in the personal saving rate since 1984 is largely due to the significant capital gains in corporate equities experienced over this period. Over five-year periods, the effect of capital gains in corporate equities on saving is substantially larger than the effect of capital gains in housing or other assets. Failure to differentiate wealth affects across asset types results in a significant understatement or overstatement of the size of their impact, depending on the asset.

Keywords: Households - Economic aspects; Saving and investment (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (17)

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Related works:
Journal Article: The Decline in Household Saving and the Wealth Effect (2006)
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