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Wealth effects out of financial and housing wealth: cross country and age group comparisons

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  • Eva Sierminska
  • Yelena Takhtamanova

Abstract

To explore the link between household consumption and wealth, we use a new source of harmonized microdata (Luxembourg Wealth Study). We investigate whether there are differences in wealth effects from different types of wealth and across age groups. We consider three countries: Canada, Italy and Finland. We find that the overall wealth effect from housing is stronger than the effect from financial wealth for the three countries in the sample. Additionally, in accordance with the life-cycle theory of consumption, we find the housing wealth effect to be significantly lower for younger households. We also find between-country differences in the wealth effect.

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Bibliographic Info

Paper provided by Federal Reserve Bank of San Francisco in its series Working Paper Series with number 2007-01.

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Date of creation: 2007
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Handle: RePEc:fip:fedfwp:2007-01

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Keywords: Consumption (Economics) ; Wealth ; Households - Economic aspects;

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References

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Citations

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Cited by:
  1. 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.
  2. Yasemin Barlas Ozer & Kam-Ki Tang, . "An Empirical Analysis of Financial and Housing Wealth Effects on Consumption in Turkey," MRG Discussion Paper Series 2809, School of Economics, University of Queensland, Australia.
  3. Christophe André, 2010. "A Bird's Eye View of OECD Housing Markets," OECD Economics Department Working Papers 746, OECD Publishing.
  4. Sousa, Ricardo M., 2009. "Wealth effects on consumption: evidence from the euro area," Working Paper Series 1050, European Central Bank.
  5. Skudelny, Frauke, 2009. "Euro area private consumption: Is there a role for housing wealth effects," Working Paper Series 1057, European Central Bank.
  6. Nicos Christodoulakis, 2008. "Ten years of EMU: Convergence, Divergence and New Policy Priorities," Research and Policy Notes 2008/01, Czech National Bank, Research Department.
  7. Jon D. Wisman, 2012. "Wage Stagnation, Rising Inequality and the Financial Crisis of 2008," Working Papers 2012-01, American University, Department of Economics.
  8. R. Calcagno & E. Fornero & M. Rossi, 2009. "The Effect of House Prices on Household Consumption in Italy," The Journal of Real Estate Finance and Economics, Springer, vol. 39(3), pages 284-300, October.
  9. Arrondel, L. & Savignac, F. & Tracol, K., 2011. "Wealth Effects on Consumption Plans: French Households in the Crisis," Working papers 344, Banque de France.
  10. Luisa Farinha, 2008. "Wealth effects on consumption in Portugal: a microeconometric approach," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
  11. Crowe, Christopher & Dell’Ariccia, Giovanni & Igan, Deniz & Rabanal, Pau, 2013. "How to deal with real estate booms: Lessons from country experiences," Journal of Financial Stability, Elsevier, vol. 9(3), pages 300-319.
  12. Caroline Van Rijckeghem, 2010. "Determinants of Private Saving in Turkey: An Update," Working Papers 2010/04, Bogazici University, Department of Economics.

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