Housing v. Financial Wealth: a Cross-Country Comparison

Monika Piazzesi and Martin Schneider

No 825, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: This paper compares wealth portfolios across countries. The household sector in the US and Canada owns much more financial wealth, and much less housing wealth, than the household sector in most of Europe. We address this fact using a calibrated two sector growth model with endogenous financial contracts. Differences in demographics, geography, taxes and regulation go part of the way to explaining the fact, but a sizeable residual remains. We argue that this residual is consistent with cultural differences that shape attitudes towards uncertainty. We discuss survey evidence on such differences. We also explore whether their recent decline can account for the increasing similarity of wealth portfolios.

Keywords: housing; saving; investment (search for similar items in EconPapers)
JEL-codes: E21 E22 E44 (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed004:825

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