Stock Market Returns and Consumption

Marco Di Maggio, Amir Kermani and Kaveh Majlesi

No 24262, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper employs Swedish data on households' stock holdings to investigate how consumption responds to changes in stock market returns. We instrument the actual capital gains and dividend payments with past portfolio weights. Unrealized capital gains lead to a marginal propensity to consume (MPC) of 23% for the bottom 50% of the wealth distribution and about 3% for the top 30% of the wealth distribution. Households’ consumption is significantly more responsive to dividend payouts across all parts of the wealth distribution. Our findings are consistent with households treating capital gains and dividends as separate sources of income.

JEL-codes: E2 E21 G02 G1 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-mac
Note: AP CF ME
References: Add references at CitEc
Citations: View citations in EconPapers (22)

Published as Marco Di Maggio & Amir Kermani & Kaveh Majlesi, 2020. "Stock Market Returns and Consumption," The Journal of Finance, Vol 75(6), Pages 3175-3219.

Downloads: (external link)
http://www.nber.org/papers/w24262.pdf (application/pdf)

Related works:
Journal Article: Stock Market Returns and Consumption (2020)
Working Paper: Stock Market Returns and Consumption (2018)
Working Paper: Stock Market Returns and Consumption (2018)
Working Paper: Stock Market Returns and Consumption (2018)
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:nbr:nberwo:24262

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w24262

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().