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Housing v. Financial Wealth: a Cross-Country Comparison

Author

Listed:
  • Monika Piazzesi
  • Martin Schneider

Abstract

This paper compares wealth portfolios across countries. The household sector in the US and Canada owns much more financial wealth, and much less housing wealth, than the household sector in most of Europe. We address this fact using a calibrated two sector growth model with endogenous financial contracts. Differences in demographics, geography, taxes and regulation go part of the way to explaining the fact, but a sizeable residual remains. We argue that this residual is consistent with cultural differences that shape attitudes towards uncertainty. We discuss survey evidence on such differences. We also explore whether their recent decline can account for the increasing similarity of wealth portfolios.

Suggested Citation

  • Monika Piazzesi & Martin Schneider, 2004. "Housing v. Financial Wealth: a Cross-Country Comparison," 2004 Meeting Papers 825, Society for Economic Dynamics.
  • Handle: RePEc:red:sed004:825
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    More about this item

    Keywords

    housing; saving; investment;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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