IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/9954.html
   My bibliography  Save this paper

The Wealthy Hand-to-Mouth

Author

Listed:
  • Kaplan, Greg
  • Violante, Giovanni L
  • Weidner, Justin

Abstract

The wealthy hand-to-mouth are households who hold little or no liquid wealth (cash, checking, and savings accounts), despite owning sizable amounts of illiquid assets (assets that carry a transaction cost, such as housing or retirement accounts). We use survey data on household portfolios for the U.S., Canada, Australia, the U.K., Germany, France, Italy, and Spain to document the share of such households across countries, their demographic characteristics, the composition of their balance sheets, and the persistence of hand-to-mouth status over the life cycle. The portfolio configuration of the wealthy hand-to-mouth suggests that these households may have a high marginal propensity to consume out of transitory income changes, a prediction for which we find empirical support in PSID data. We explain the implications of this group of consumers for macroeconomic modeling and fiscal policy analysis.

Suggested Citation

  • Kaplan, Greg & Violante, Giovanni L & Weidner, Justin, 2014. "The Wealthy Hand-to-Mouth," CEPR Discussion Papers 9954, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9954
    as

    Download full text from publisher

    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9954
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Patrick Fève & Jean‐Guillaume Sahuc, 2017. "In Search of the Transmission Mechanism of Fiscal Policy in the Euro Area," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(3), pages 704-718, April.
    2. Ampudia, Miguel & Georgarakos, Dimitris & Slacalek, Jiri & Tristani, Oreste & Vermeulen, Philip & Violante, Giovanni L., 2018. "Monetary policy and household inequality," Working Paper Series 2170, European Central Bank.
    3. Pedro Brinca & Miguel H. Ferreira & Francesco Franco & Hans A. Holter & Laurence Malafry, 2017. "Fiscal Consolidation Programs and Income Inequality," CeBER Working Papers 2017-11, Centre for Business and Economics Research (CeBER), University of Coimbra.
    4. repec:bis:bisbps:95 is not listed on IDEAS
    5. repec:eee:eecrev:v:98:y:2017:i:c:p:32-48 is not listed on IDEAS
    6. Adrien Auclert, 2015. "Monetary Policy and the Redistribution Channel," 2015 Meeting Papers 381, Society for Economic Dynamics.
    7. Hara, Ryota & Unayama, Takashi & Weidner, Justin, 2016. "The wealthy hand to mouth in Japan," Economics Letters, Elsevier, vol. 141(C), pages 52-54.
    8. Javier Andrés & José E. Boscá & Javier Ferri, 2016. "Instruments, rules, and household debt: the effects of fiscal policy," Oxford Economic Papers, Oxford University Press, vol. 68(2), pages 419-443.
    9. Brinca, Pedro & Holter, Hans A. & Krusell, Per & Malafry, Laurence, 2016. "Fiscal multipliers in the 21st century," Journal of Monetary Economics, Elsevier, vol. 77(C), pages 53-69.
    10. repec:eee:eecrev:v:100:y:2017:i:c:p:525-543 is not listed on IDEAS
    11. Stijn Claessens & M. Ayhan Kose, 2017. "Asset prices and macroeconomic outcomes: A survey," CAMA Working Papers 2017-76, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    12. Crossley, Thomas F. & Low, Hamish & Smith, Sarah, 2016. "Do consumers gamble to convexify?," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 276-291.
    13. Albonico, Alice & Rossi, Lorenza, 2017. "Inflation bias and markup shocks in a LAMP model with strategic interaction of monetary and fiscal policy," Journal of Macroeconomics, Elsevier, vol. 52(C), pages 39-55.
    14. Marco Bernardini & Selien De Schryder & Gert Peersman, 2017. "Heterogeneous Government Spending Multipliers in the Era Surrounding the Great Recession," CESifo Working Paper Series 6479, CESifo Group Munich.
    15. Surico, Paolo & Trezzi, Riccardo, 2015. "Consumer Spending and Fiscal Consolidation: Evidence from a Housing Tax Experiment," Finance and Economics Discussion Series 2015-57, Board of Governors of the Federal Reserve System (US), revised 20 Jan 2016.
    16. Javier Andrés & Óscar Arce & Carlos Thomas, 2016. "When fiscal consolidation meets private deleveraging," Working Papers 1622, Banco de España;Working Papers Homepage.
    17. repec:nse:ecosta:ecostat_2017_494-495-496_5 is not listed on IDEAS
    18. repec:kea:keappr:ker-20170630-33-1-05 is not listed on IDEAS
    19. Atalay, Kadir & Barrett, Garry & Edwards, Rebecca & Yu, Chaoran, 2016. "Household Indebtedness and Housing Prices in Australia," Working Papers 2016-18, University of Sydney, School of Economics.
    20. Andrew Glover, 2018. "Aggregate Effects of Minimum Wage Regulation at the Zero Lower Bound," 2018 Meeting Papers 1285, Society for Economic Dynamics.
    21. repec:eee:joecas:v:15:y:2017:i:c:p:32-38 is not listed on IDEAS
    22. repec:eee:eecrev:v:103:y:2018:i:c:p:39-59 is not listed on IDEAS
    23. repec:prs:ecstat:estat_0336-1454_2017_num_494_1_10782 is not listed on IDEAS

    More about this item

    Keywords

    Consumption; Fiscal Policy; Hand-to-Mouth; Household Portfolio; Liquidity;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:9954. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.