Wealth Effects Out of Financial and Housing Wealth: Cross Country and Age Group Comparisons

Federal Reserve Bank of San Francisco Working Paper No. 2007-01

40 Pages Posted: 20 Aug 2007

See all articles by Eva Sierminska

Eva Sierminska

LISER; DIW Berlin - German Socio-Economic Panel Study (SOEP); IZA Institute of Labor Economics

Yelena F. Takhtamanova

Federal Reserve Bank of San Francisco; affiliation not provided to SSRN

Date Written: January 2007

Abstract

To explore the link between household consumption and wealth, we use a new source of harmonized microdata (Luxembourg Wealth Study). We investigate whether there are differences in wealth effects from different types of wealth and across age groups. We consider three countries: Canada, Italy and Finland. We find that the overall wealth effect from housing is stronger than the effect from financial wealth for the three countries in the sample. Additionally, in accordance with the life-cycle theory of consumption, we find the housing wealth effect to be significantly lower for younger households. We also find between-country differences in the wealth effect.

Keywords: household behavior, wealth effect, consumption

JEL Classification: D1, J1

Suggested Citation

Sierminska, Eva and Takhtamanova, Yelena F. and Takhtamanova, Yelena F., Wealth Effects Out of Financial and Housing Wealth: Cross Country and Age Group Comparisons (January 2007). Federal Reserve Bank of San Francisco Working Paper No. 2007-01, Available at SSRN: https://ssrn.com/abstract=1007825 or http://dx.doi.org/10.2139/ssrn.1007825

Eva Sierminska (Contact Author)

LISER ( email )

3, avenue de la Fonte
Esch-sur-Alzette, L-4364
Luxembourg

HOME PAGE: http://www.sierminska.eu

DIW Berlin - German Socio-Economic Panel Study (SOEP)

Mohrenstraße 58
Berlin, 10117
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Yelena F. Takhtamanova

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

affiliation not provided to SSRN ( email )

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