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The Effect of Housing and Stock Wealth Losses on Spending in the Great Recession

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  • Marco Angrisani
  • Michael D. Hurd
  • Susann Rohwedder

Abstract

We use panel data at the household level on a complete inventory of household spending and assets to estimate the spending response to the sharp and largely unexpected declines in house and stock market prices that occurred in the Great Recession. Our data span the period 2001-2011, so that we are able to separate trends in spending from innovations in response to unexpected wealth change. We find the marginal propensity to consume out of an unexpected housing wealth change to be seven cents per dollar, and about four cents per dollar out of financial wealth.

Suggested Citation

  • Marco Angrisani & Michael D. Hurd & Susann Rohwedder, 2015. "The Effect of Housing and Stock Wealth Losses on Spending in the Great Recession," Working Papers WR-1101, RAND Corporation.
  • Handle: RePEc:ran:wpaper:wr-1101
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    Cited by:

    1. Jim Been & Susann Rohwedder & Michael Hurd, 2020. "Does Home Production Replace Consumption Spending? Evidence from Shocks in Housing Wealth in the Great Recession," The Review of Economics and Statistics, MIT Press, vol. 102(1), pages 113-128, March.
    2. de Bresser, Jochem & Kools, Lieke & Knoef, M.G., 2019. "Cutting one’s coat according to one’s cloth : How did the Great Recession affect retirement resources and expenditure goals?," Other publications TiSEM 9415a8f7-182f-4675-893e-c, Tilburg University, School of Economics and Management.
    3. Javier Andres & Jose E. Bosca & Javier Ferri & Cristina Fuentes-Albero, 2018. "Household's Balance Sheets and the Effect of Fiscal Policy," Finance and Economics Discussion Series 2018-012r1, Board of Governors of the Federal Reserve System (U.S.), revised 29 Jun 2020.

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