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Households' response to wealth changes: do gins or losses make a difference?

In: Proceedings of the IFC Conference on "Measuring the financial position of the household sector", Basel, 30-31 August 2006 - Volume 1

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  • Robert-Paul Berben
  • Kerstin Bernoth
  • Mauro Mastrogiacomo

Abstract

We estimate the excess impact of financial asset capital losses relative to gains on household active savings and durable goods consumption in the Netherlands. The sample period covers both the stock-market boom during the 90's, and the bear period afterwards. The results suggest that households react more to capital losses than to capital gains. Failing to take into account this asymmetry may seriously bias the estimates of the marginal propensity to consume out of wealth.

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This chapter was published in:

  • Irving Fisher Committee, 2007. "Proceedings of the IFC Conference on "Measuring the financial position of the household sector", Basel, 30-31 August 2006 - Volume 1," IFC Bulletins, Bank for International Settlements, number 25, October -.
    This item is provided by Bank for International Settlements in its series IFC Bulletins chapters with number 25-10.

    Handle: RePEc:bis:bisifc:25-10

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    Cited by:
    1. Jakubik, Petr, 2011. "Households’ response to economic crisis," BOFIT Discussion Papers 7/2011, Bank of Finland, Institute for Economies in Transition, revised 16 May 2011.
    2. Petr Jakubík, 2011. "Household Balance Sheets and Economic Crisis," Working Papers IES 2011/20, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jun 2011.
    3. Mauro Mastrogiacomo & Rob Alessie, 2011. "Did you really save so little for your retirement? An analysis of retirement savings and unconventional retirement accounts," CPB Discussion Paper 200, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Dnb, 2011. "DELFI : DNB's Macroeconomic Policy Model of the Netherlands," DNB Occasional Studies 901, Netherlands Central Bank, Research Department.
    5. Iulia Siedschlag, 2008. "Macroeconomic Differentials and Adjustment in the Euro Area," SUERF Studies, SUERF - The European Money and Finance Forum, number 2008/3 edited by Morten Balling.
    6. Henk Kranendonk & Johan Verbruggen, 2007. "SAFFIER; a multi-purpose model of the Dutch economy for short-term and medium-term analyses," CPB Document 144, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Wim Suyker, 2006. "Nuancing the favourable assessments of the Nordic economies," CPB Memorandum 153, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Horag Choi & Nelson C. Mark, 2009. "Trending Current Accounts," NBER Working Papers 15244, National Bureau of Economic Research, Inc.
    9. Mark van Duijn & Maarten Lindeboom & Mauro Mastrogiacomo & M. Lundborg, 2009. "Pension plans and the retirement replacement rates in the Netherlands," CPB Discussion Paper 118, CPB Netherlands Bureau for Economic Policy Analysis.
    10. Barrett, Alan & Bergin, Adele & FitzGerald, John & Traistaru-Siedschlag, Iulia, 2006. "Economic Assessment of the Euro Area: Forecasts and Policy Analysis, Autumn Report 2006," Research Series, Economic and Social Research Institute (ESRI), number sustat22.
    11. Atalay, Kadir & Whelan, Stephen & Yates, Judith, 2013. "Housing Wealth and Household Consumption: New Evidence from Australia and Canada," Working Papers 2013-04, University of Sydney, School of Economics.

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