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- W2182004437 abstract "The consumption wealth effect is often interpreted as capturing the effect of unexpected permanent movements in wealth on consumption. Relatively recently however, Lettau and Ludvigson (2004) found that in the United States, changes in wealth are mostly transitory, implying that only a small fraction of total wealth variation actually has a measurable effect on consumption. We use data for New Zealand, where transitory stock market cycles have not dominated variation in household net worth. We find that most changes in housing and financial wealth have been permanent, and that a typical wealth change does imply a lagged consumption response. In addition, we estimate a model which explicitly characterizes the role of household debt. Our evidence suggests that there is a positive relation between gross household wealth and debt, in line with the hypothesis that liquidity constraints or precautionary saving influence the strength of the relation between wealth and consumption." @default.
- W2182004437 created "2016-06-24" @default.
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- W2182004437 date "2010-01-01" @default.
- W2182004437 modified "2023-09-24" @default.
- W2182004437 title "Does Wealth Variation Matter for Consumption" @default.
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