Wealth Shocks and Mpc Heterogeneity

29 Pages Posted: 26 Jun 2019 Last revised: 15 Jan 2023

See all articles by Dimitris Christelis

Dimitris Christelis

Adam Smith Business School, University of Glasgow; Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II; Center for Financial Studies (CFS); Netspar; CSEF - University of Naples Federico II - Centre for Studies in Economics and Finance (CSEF)

Dimitris Georgarakos

European Central Bank (ECB) - Directorate General Research; Center for Financial Studies (CFS)

Tullio Jappelli

University of Naples Federico II - Department of Economics and Statistics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Center for Studies in Economics and Finance - CSEF; CSEF - University of Naples Federico II - Centre for Studies in Economics and Finance (CSEF)

Luigi Pistaferri

Centre for Economic Policy Research (CEPR); Stanford University

Maarten van Rooij

De Nederlandsche Bank; Netspar

Multiple version iconThere are 3 versions of this paper

Date Written: June 2019

Abstract

We use the responses of a representative sample of Dutch households to survey questions that ask how much their consumption would change in response to unexpected, permanent, positive or negative shocks to their home value. The average MPC is in the 2.1-4.7% range, in line with econometric estimates that use housing wealth and consumption realizations. However, our analysis uncovers significant sample heterogeneity, with over 90% of the sample reporting no consumption adjustment to positive or negative wealth shocks. The relation between the MPC from wealth shocks and cash-on-hand is negative, consistent with models with precautionary saving and liquidity constraints.

Suggested Citation

Christelis, Dimitrios and Georgarakos, Dimitris and Jappelli, Tullio and Pistaferri, Luigi and Pistaferri, Luigi and van Rooij, Maarten, Wealth Shocks and Mpc Heterogeneity (June 2019). NBER Working Paper No. w25999, Available at SSRN: https://ssrn.com/abstract=3408934

Dimitrios Christelis (Contact Author)

Adam Smith Business School, University of Glasgow ( email )

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Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II ( email )

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CSEF - University of Naples Federico II - Centre for Studies in Economics and Finance (CSEF) ( email )

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Italy

Dimitris Georgarakos

European Central Bank (ECB) - Directorate General Research ( email )

Sonnemannstrasse 20
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Germany

Center for Financial Studies (CFS) ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Tullio Jappelli

University of Naples Federico II - Department of Economics and Statistics ( email )

Via Cintia - Monte S. Angelo
Napoli, 80126
Italy

HOME PAGE: http://www.csef.it/people/jappelli.htm

Centre for Economic Policy Research (CEPR)

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United Kingdom

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European Corporate Governance Institute (ECGI)

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Belgium

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Center for Studies in Economics and Finance - CSEF ( email )

Via Cintia - Monte S. Angelo
Napoli, 80126
Italy

HOME PAGE: http://www.csef.it/people/jappelli.htm

CSEF - University of Naples Federico II - Centre for Studies in Economics and Finance (CSEF) ( email )

Via Cintia
Complesso Monte S. Angelo
Naples, Naples 80126
Italy

HOME PAGE: http://www.csef.it/people/jappelli.htm

Luigi Pistaferri

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Stanford University ( email )

Stanford, CA 94305
United States

Maarten van Rooij

De Nederlandsche Bank ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

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Netherlands

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