How do Consumption and Asset Returns React to Wealth Shocks? Evidence from the U.S. and the U.K

Ricardo Sousa

No 14/2010, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: In this work, I analyze the response of consumption and asset returns to unexpected wealth variation. Using data at quarterly frequency for the U.S. and the U.K., I show that: (i) while housing wealth shocks have a very persistent effect on consumption, financial wealth shocks only have transitory effects; and (ii) similarly, unexpected variation in housing wealth delivers a reasonably persistent response of real returns while financial wealth shocks have just a temporary effect.

Keywords: financial wealth; housing wealth; consumption; asset returns. (search for similar items in EconPapers)
JEL-codes: D12 E21 E44 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-bec, nep-cba and nep-ure
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Citations: View citations in EconPapers (2)

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