IDEAS home Printed from https://ideas.repec.org/p/eec/wpaper/2508.html
   My bibliography  Save this paper

Heterogeneity in the marginal propensity to consume out of wealth: Evidence from Spanish panel data

Author

Listed:
  • Antonio Cutanda

    (Universidad de Valencia, Valencia, Spain)

  • Juan A. Sanchis

    (Universidad de Valencia and ERICES, Valencia, Spain)

Abstract

This paper estimates the marginal propensity to consume out of wealth using Spanish panel data from the Survey on Household Finances from 2002 to 2017. This period comprises an entire economic cycle for the Spanish economy, including the Great Recession and the housing bubble. We estimate marginal propensities to consume out of wealth about 4%, which aligns with the values obtained for comparable economies. Further, our panel data estimates indicate that ignoring unobserved individual fixed effects might bias the estimates. Additionally, we confirm that the estimated parameters change along the income and wealth distributions, confirming a concave consumption function for the Spanish case. We do not find a statistically significant effect of financial or liquid wealth on non-durable consumption and confirm a higher marginal propensity to consume for hand-to-mouth consumers. Finally, the financial crisis had a relevant and negative impact on the size of the marginal propensity to consume out of wealth.

Suggested Citation

  • Antonio Cutanda & Juan A. Sanchis, 2025. "Heterogeneity in the marginal propensity to consume out of wealth: Evidence from Spanish panel data," Working Papers 2508, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:2508
    as

    Download full text from publisher

    File URL: http://repecsrv.uv.es/paper/RePEc/pdf/eec_2508.pdf
    File Function: First version, 2508
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Marginal Propensity to Consume out of Wealth; Liquid and Illiquid wealth; Hand-to-Mouth; Heterogeneity;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    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:eec:wpaper:2508. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vicente Esteve (email available below). General contact details of provider: https://edirc.repec.org/data/dsvales.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.