Bottazzi, Renata, Trucchi, Serena ![]() |
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Abstract
We estimate marginal propensities to consume from wealth shocks. We exploit large asset-priceshocks in 2007–2008 and household-level panel data to implement instrumental variables. A fallof one euro in risky financial wealth resulted in cuts to annual total (non-durable) consumption of8.5–9 (5.5–5.7) cents, with small effects on food spending. Effects seem stronger for lower-wealthor indebted households, but significant responses from wealthier households and those withoutmortgages are important for our baseline results. Counterfactuals indicate financial-wealth effectswere relatively important for consumption falls in Italy in 2007–2008. The estimated effects areconsistent with a simulated life-cycle model capturing the wealth shock.
Item Type: | Article |
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Date Type: | Publication |
Status: | Published |
Schools: | Business (Including Economics) |
Publisher: | Wiley |
ISSN: | 0347-0520 |
Date of First Compliant Deposit: | 9 April 2020 |
Last Modified: | 05 Dec 2024 04:45 |
URI: | https://orca.cardiff.ac.uk/id/eprint/129730 |
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