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Consumption, wealth and business cycles : why is Germany different? Author info | Abstract | Publisher info | Download info | Related research | Statistics Hamburg, Britta
Hoffmann, Mathias
Keller, Joachim
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This paper studies the long-run relationship between consumption, asset wealth and income ? the consumption-wealth ratio ? in Germany, based on data from 1980 to 2003. Earlier papers for the Anglo-Saxon economies have documented that departures of these three variables from their common trend signal future changes in asset prices. We find that for Germany they predict changes in income ? the consumption wealth ratio predicts business cycles, not stock market cycles. Asset price changes are found to have virtually no effect on German consumption, both in the short as well as in the long-run. Conversely, German asset prices are predictable from the U.S. consumption-wealth ratio. We offer an explanation of these findings that emphasizes structural differences between the bank-based German financial system and the rather market-based Anglo-American system: stock ownership by private households is much less widespread in Germany than in the Anglo-Saxon economies and the share of publicly traded equity in household wealth is much smaller in Germany than in the U.S., the UK or Australia. --
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Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number
2005,16.
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Date of creation: 2005Date of revision:
Handle: RePEc:zbw:bubdp1:3375Contact details of provider: Postal: Postfach 10 06 02, 60006 Frankfurt Phone: 0 69 / 95 66 - 34 55 Fax: 0 69 / 95 66 30 77 Email: Web page: http://www.bundesbank.de/ More information through EDIRC
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Keywords: Wealth Effect on Consumption ; Business Cycles ; Monetary Policy Transmission ; Financial Systems ; Asset Price Predictability ; Other versions of this item:
Find related papers by JEL classification: E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles G20 - Financial Economics - - Financial Institutions and Services - - - General E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
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references Cited by : (explanations , 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.)
Britta Hamburg & Mathias Hoffmann & Joachim Keller, 2008.
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