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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

  • Robert-Paul Berben
  • Kerstin Bernoth
  • Mauro Mastrogiacomo

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.
  • 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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