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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
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How Important is Wealth for Explaining Household Consumption Over the Recent Crisis?
An Empirical Study for the United States, Japan and the Euro Area
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- Clovis Kerdrain1, 2
- Author Affiliations
- 1: INSEE, France
- 2: OECD, France
- 25 May 2011
- Bibliographic information
This paper provides new empirical results linking financial and housing wealth to household consumption for the United States, Japan and the euro area. The results suggest that there are important cross-country differences in how wealth, especially housing wealth, affects consumption. They further demonstrate that it can be important to take into account wealth effects on consumption in short-term forecasting exercises, a point which is particularly well illustrated in relation to the recent economic crisis. In addition, conditional projections underline the importance of asset price developments and wealth in determining US savings over the medium term.
- housing wealth
- JEL Classification:
- C22: Mathematical and Quantitative Methods / Single Equation Models ; Single Variables / Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes
- D12: Microeconomics / Household Behavior and Family Economics / Consumer Economics: Empirical Analysis
- E21: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Consumption ; Saving ; Wealth
- E44: Macroeconomics and Monetary Economics / Money and Interest Rates / Financial Markets and the Macroeconomy