The Decline in Household Saving and the Wealth Effect
18 Pages Posted: 24 Sep 2004
Abstract
Using a unique set of household level panel data, we estimate the effect of capital gains on saving by asset type, controlling for observable and unobservable household specific fixed effects. The results suggest that the decline in the personal saving rate since 1984 is largely due to the significant capital gains in corporate equities experienced over this period. Over five-year periods, the effect of capital gains in corporate equities on saving is substantially larger than the effect of capital gains in housing or other assets. Failure to differentiate wealth affects across asset types results in a significant understatement or overstatement of the size of their impact, depending on the asset.
Keywords: Personal saving, wealth effect, capital gains
JEL Classification: D12, E21
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Stock Ownership Patterns, Stock Market Fluctuations, and Consumption
-
Comparing Wealth Effects: The Stock Market Versus the Housing Market
By Karl E. Case, John M. Quigley, ...
-
Comparing Wealth Effects: The Stock Market Versus the Housing Market
By Karl E. Case, Robert J. Shiller, ...
-
Saving Puzzles and Saving Policies in the United States
By Annamaria Lusardi, Jonathan S. Skinner, ...
-
The Impact of Demographics on Housing and Non-Housing Wealth in the United States
-
Household Saving and Real House Prices: An International Perspective