Wealth Effects and Consumption in Thailand
AbstractThe effects of changes in wealth on consumption in Thailand are estimated, using a cross-sectional household survey conducted in 2010. It is found that consumption, after conditioning for income and household characteristics, is increasing in wealth, whether measured in terms of net worth or gross asset values. The estimated elasticity of consumption with respect to wealth is 0.06, while the estimated income elasticity is 0.60. The corresponding marginal propensity to consume out of wealth is estimated to be around 0.02-0.03. Physical assets, such as housing, matter for consumption more than financial assets, with the elasticity being about five-fold larger. Durable goods consumption is found to be much more sensitive to wealth than consumption of non-durable goods. The paper also discusses evidence that wealth eects may vary across households, and can be explained by the levels of existing wealth and certain household characteristics.
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Bibliographic InfoPaper provided by Economic Research Department, Bank of Thailand in its series Working Papers with number 2011-01.
Length: 30 pages
Date of creation: Jan 2011
Date of revision:
consumption; wealth effects;
Find related papers by JEL classification:
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-07 (All new papers)
- NEP-DEV-2013-01-07 (Development)
- NEP-MAC-2013-01-07 (Macroeconomics)
- NEP-SEA-2013-01-07 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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