The Wealthy Hand-to-Mouth

Gianluca Violante, Greg Kaplan and Justin Weidner
Additional contact information
Gianluca Violante: NYU

No 192, 2014 Meeting Papers from Society for Economic Dynamics

Abstract: The wealthy hand-to-mouth are households who hold little or no liquid wealth (e.g. cash, checking, and saving accounts), despite owning sizable amounts of illiquid assets (i.e., assets that carry a transaction cost, such as housing, large durables, or retirement accounts). This portfolio configuration implies that these households have large marginal propensities to consume out of small income changes –a key determinant of the macroeconomic effects of fiscal policy. The wealthy hand-to-mouth, therefore, behave in many respects like households with little or no net worth, yet they escape standard definitions (and empirical measurements) of hand-to-mouth agents based on net worth. We use survey data on household portfolios for the U.S., Canada, Australia, the U.K., Germany, France, Italy, and Spain to document the share of such households across countries, their demographic characteristics, the composition of their balance sheet, and the persistence of hand-to-mouth status over the life cycle. Finally, we discuss the implications of this group of consumers for macroeconomic modelling and policy analysis.

Date: 2014
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (403)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2014/paper_192.pdf (application/pdf)

Related works:
Journal Article: The Wealthy Hand-to-Mouth (2014)
Working Paper: The Wealthy Hand-to-Mouth (2014)
Working Paper: The Wealthy Hand-to-Mouth (2014)
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:red:sed014:192

Access Statistics for this paper

More papers in 2014 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().