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Wealth Effects in Emerging Market Economies

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Author Info
Tuomas A. Peltonen () (European Central Bank)
Ricardo M. Sousa () (Universidade do Minho - NIPE)
Isabel S. Vansteenkiste () (European Central Bank)

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Abstract

We build a panel of 14 emerging economies to estimate the magnitude of housing, stock market, and money wealth effects on consumption. Using modern panel data econometric techniques and quarterly data for the period 1990/1-2008/2, we show that; (i) wealth effects are statistically significant and relatively large in magnitude; (ii) housing wealth effects tend to be smaller for Asian emerging markets while stock markets wealth effects are, in general, smaller for Latin American countries; (iii) housing wealth effects have increased for Asian countries in recent years; and (iv) consumption reacts stronger to negative than to positive shocks in housing and financial wealth.

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Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 4/2009.

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Date of creation: 2009
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Handle: RePEc:nip:nipewp:4/2009

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Postal: Núcleo de Investigação em Políticas Económicas, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal
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Related research
Keywords: wealth effects; consumption; emerging markets.;

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Find related papers by JEL classification:
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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