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Wealth, Composition, Housing, Income, and Consumption

Author

Listed:
  • William Hardin

    () (Department of Finance and Real Estate, Florida International University)

  • Sheng Guo

    () (Department of Economics, Florida International University)

Abstract

The present research, which covers the latest residential boom and bust cycle, highlights that there are no uniform or constant time invariant wealth, housing, and income relations. Even more important, wealth composition is shown to be a significant determinant of consumption. The marginal effects of housing wealth, financial wealth, and income differ substantially with wealth composition. Households with the highest percentage of net worth in financial assets have much lower income effects, have substantially higher marginal effects associated with stock holdings, and have housing equity effects that differ noticeably from other households. Income effects for groups with the smallest amounts of relative financial wealth are dramatically higher than for households with greater financial wealth. Wealth and its composition affect consumption.

Suggested Citation

  • William Hardin & Sheng Guo, 2012. "Wealth, Composition, Housing, Income, and Consumption," Working Papers 1201, Florida International University, Department of Economics.
  • Handle: RePEc:fiu:wpaper:1201
    as

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    File URL: http://economics.fiu.edu/research/working-papers/2012/wealth-composition-housing-income-and-consumption/12-01.pdf
    File Function: First version, 2012
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Consumption; Income; Wealth Composition; Wealth Effect; Housing Effect;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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