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)
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)
Number of pages: 29Posted: 26 Jun 2019Last Revised: 15 Jan 2023
You are currently viewing this paper
Downloads 27
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.
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
Subscribe to this fee journal for more curated articles on this topic
FOLLOWERS
593
PAPERS
7,762
Feedback
Feedback to SSRN
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.